Saturday, August 13, 2016

Dynamic Pricing (How Not to Get Screwed)

   Have you ever been asked to enter your zipcode before you can see the price of an item online? It has nothing to do with availability, or shipping costs. It determines how much you are going to pay for an item compared to your coworker sitting in the next cubicle.  Read on...

   It all started with a sluggish browser and Amazon. I seemed that every time I tried to visit using the Firefox web browser my system would slow to a crawl, like the horrid dial-up days of AOL and CompuServe. Initially I chocked it up a Linux weirdness and moved on. Finally, on a slow Saturday morning (today) I googled the issue and found a discussion thread on the topic. While reading about the various solutions, tips and tricks, I noticed a post by a user complaining about getting different prices on Amazon from the same seller, for the same product, at the same time. It seems he was using two different computers and noticed the discrepancy. The term "dynamic pricing" was used and that piqued my curiosity.

   Just yesterday one my coworkers mentioned that he had bought a pair of shoes on, got them two days later and liked them so much he decided to buy another pair. However, when he went back to purchase the second pair he said the price had gone up by roughly $20, so he decided they weren't such a good deal after all. I didn't think much about what he said until now as I started reading up on this trend.

   Then I remembered my own experience with a big box home improvement store and a Dyson vacuum cleaner. The difference in price was $50 depending whether I was looking at it my cell phone vs. my desktop PC at the office. After a trip to the store I could not find the vacuum cleaner listed at the lower price. I sent feedback online complaining about the two different versions of pricing and I assumed that their system was operating two different databases with one be out of date. Little did I know I was being manipulated.

"Mobile users might see a higher price than desktop users."

   If you shop online you may be presented with different prices for the same item (by the same retailer) depending on how you are shopping. Mobile users might see a higher price than desktop users. Same thing goes for Mac users. Retailers use a combination of your IP address/zipcode, GPS location, operating system (Macs are more expensive, therefore you have more money) and browsing history (did you just look at the same item on a competitor's website?) to manipulate the price you presented with. Entering a zipcode for a more affluent part of town could result in a higher price, than entering a zipcode for the area across the tracks. And, it's not limited to online retailers only. The big name "brick and mortar" companies do it too. Some of the names I read online were the likes of Staples and Best Buy to name a few.

   The most interesting thing is that it is no longer a "dirty little secret". Google the term "dynamic pricing" (here, I'll do it for you: and what you see should infuriate you, or at least it did me.  However, as they say "knowledge is power", and with a little online reading you can probably find some clever ways to manipulate the manipulators such as disabling cookies, set browser to clear history on exit, using an ad blocker, etc. Of course, it may not always be a bad thing. I recently purchased some security cameras from Best Buy online and when I went to pick them up at the local store (same day) the clerk pointed out that the actual charge to my credit card was $20 less due to "cheaper in store pricing" or something. I was happy and didn't make the connection until now. But what if I had opted to pay for shipping and had it sent to my house? Would I have been aware of the difference?  In college economics one of the things we learned that an item's value, or worth, is whatever someone is willing to pay for it.  Why else would the same house, made from the same materials, sell for $50k in one state and $500k in another?

   Feel free to share your experiences below. I'd love to know if anyone else has noticed this.

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