>In the end, people with higher quality demands will pay a significant, dis-proportionate premium. So, you can tap into that, which means the premium tier essentially cross-subsidizes the cheap tier. Everybody angry at this practice needs to understand that they couldn't just sell the premium tier for $150. They'd need to sell it for $250, or whatever the weighted mean is. Worse, they'd likely sell fewer items in total, so $280 or some such is more likely to reach the same total profit.
Another example is selling books for cheaper in countries with lower incomes. Yet another example is countries charging more for access to national parks to people from richer countries than poorer countries. And another example is using coupons to get discounts, or student discounts, etc.
It is not a perfect mechanism, and sometimes the subsidies are not from and to the populations that would make it "fair", but on a population wide level, it works pretty well.
See:
https://www.investopedia.com/terms/m/marketsegmentation.asp
Another example is selling books for cheaper in countries with lower incomes. Yet another example is countries charging more for access to national parks to people from richer countries than poorer countries. And another example is using coupons to get discounts, or student discounts, etc.
It is not a perfect mechanism, and sometimes the subsidies are not from and to the populations that would make it "fair", but on a population wide level, it works pretty well.