Either everyone that does this is an idiot (unlikely) or it actually works for their markets and increases their bottom line (likely).

I once worked for a fairly big (500m-1b market cap) company that worked this way. Pricing was customized for every client. They, like many companies, made a ton of money doing this.

One down side, however, was that this business model can trap you. Once you've sold customers at lots of different price points, you can never go back and publish pricing, since those customers that are overpaying will be upset. You could set your prices high, but that would turn off many new customers who need a lower price point. So, while you can make a lot of money doing this, give it some thought before committing to it.

This is why Google Adwords is so genius. It's both dynamic (charging more for bigger pockets) and it scales, which is hard balance to strike.