Why are rates charged to internal customers generally lower than those for external customers?

The rationale behind the answer centers on the financial structure and support systems in place within organizations. Internal customers often benefit from subsidies and funding that are allocated by the organization or institution, which helps to cover some of the costs associated with the services they receive. This financial backing typically comes from the organization's operational budget, which is designed to support its own departments and services, making it feasible to charge lower rates to those within the organization.

In contrast, external customers do not have access to these internal subsidies and must bear the full cost of the services or products they utilize, as the organization needs to ensure that all operational costs are recuperated through their charges. This creates a price differential where internal charges are subsidized, leading to overall lower rates for internal customers compared to their external counterparts.