Is it permissible for a merchant to sell a single item at different prices to different people?

The questioner : The third question asks: What is the ruling on a merchant who sells items at different prices to people, even if the item is the same? For example, he sells it to one person for ten riyals, to another for twenty, and to a third for five? Is such a practice permissible or not?

The Shaykh : If this difference is due to market fluctuations, where the price of the item increases one day and decreases another, then there is nothing wrong with selling at the market price, and there is no prohibition in that. However, if the difference in the price he charges is based on the buyer's shrewdness, his skill in bargaining, or his lack thereof—so that if he sees the buyer is not skilled, he takes advantage of him, and if he sees the buyer is skilled, he lowers the price for him—then this is not permissible, because it is deception and contrary to sincere advice. It is established from the Prophet (peace and blessings be upon him) in the hadith of Tamim al-Dari that he said: Just as he would not be pleased for anyone to do such a thing to him, how could he be pleased to do it to his Muslim brothers? It is obligatory for a person to sell according to the prices prevailing in his location, and not to set one price for one person and another price for another due to the buyer's ignorance. However, if he favors some of his companions or friends by lowering the price for them, there is nothing wrong with that, and he has done nothing wrong. Or if he sells the item at its market value, and then a man persists in bargaining and asking for a reduction until he lowers the price for him, this does not harm him, because he has not deviated from the customary price.