3 ms·

> “Today almost all the prices that you see online are actually designed for you. Dynamic pricing is the art of squeezing every dollar out of your pocket.” Is

• j-c-hewitt 9y ago
  False. When most people talk about dynamic pricing or repricing, it's about competing with other sellers or other retailers. Retailer A may reprice according to what the going price is at Retailer B to try to avoid losing the business. This goes on quite a lot, but it's not on a per user basis because that would make no sense. People already self segregate into pricing groups: some people buy from high end retailers and other people buy from discount retailers, often for identical manufactured products. If it's showing different prices to different users it's usually something specifically B2B where you need to have a relationship with some kind of vendor to even see the prices. The public nature of most consumer prices makes it so that this kind of scheme is not all that tenable. Sure you could show different ads to people who use different devices but most of the time the different prices are the ones you pay to the advertising provider -- the consumers generally pay the same. When people try to geographically discriminate for digital products you often wind up with a big retail arbitrage trade that appears out of nowhere -- see the market in digital PC game keys purchased in one area with lower prices and sold in another area with higher prices. >He continued: “The second problem here is that even if I were to switch, we have to understand that the consequences of the switch could quite easily be service degradation. I have, in a way, created a partnership with Google over 10 years of searches. They have literally tens of thousands of emails from me, thousands of points of search data. If I were to suddenly switch to Yahoo or to Bing, that is a massive loss for me because Yahoo and Bing don’t have that data. I can’t easily export that data. That, to me, shows a fundamental flaw in so much of the economics literature, in that it tries to model a unitary consumer switching. People are in very different circumstances if, for example, they used Google for five years intensively, or if they have cultivated a, say, diverse array of search engines that they use. Wildly overstating how much Google cares about any individual user and how much data is actually available to advertisers or internally available within Google. For the user if you switch from Google to Bing the change is relatively minor. A lot of people out there probably 'switch' to Bing accidentally when Windows upgrades or they accidentally set their browser to a different default - and may barely notice the difference. This article is nearly stream of consciousness buzzword gibberish that has no relationship whatsoever to the topic ostensibly being discussed. It's a fun word game for some people to gargle out buzzwords and demonstrate how hip they are to technology.
  • mrow84 9y ago
    > it's not on a per user basis because that would make no sense Unless I have misunderstood, you are suggesting that fixed pricing provides higher expected returns than tailored pricing, which I think is incorrect. Imagine people's private value for a particular good is uniformly distributed between 0 and 1. In the scheme you propose the expected per-customer return for a fixed price x is x * (1-x), because everyone the x fraction of people whose private value falls below x will not pay at all, returning 0, and the return for all the (1-x) fraction of people whose private value is above x is just x, because the price is fixed. In a tailored pricing scheme, still requiring a minimum price of x, the expected per-customer return is 0.5 * (1+x) * (1-x), because again the x fraction of people whose private value is below x will not pay at all, returning 0, but for the (1-x) fraction whose private value is above x you expect to receive their average private value, or 0.5 * (1+x) (obviously assuming you could determine this perfectly). The maximum return under these two schemes is using the tailored pricing scheme with x set as 0, meaning that tailored pricing for all customers provides the highest expected return. You can see a plot of the two curves here [0]. This is a simple model, and perhaps someone more skilled in mathematics can provide a more general answer, but it does show that tailored pricing _can_ be beneficial (suggesting firms would probably try to do it if they found it to make sense, and were able). I would also note that the following quote seems like it is probably not correct as well, given that a web server has full control over what it returns to each individual, as well as the means for obtaining fairly reliable distinguishing information. The prevalence of these behaviours is difficult to assess because it is somewhat difficult to perform comparisons between individual responses at scale. > The public nature of most consumer prices makes it so that this kind of scheme is not all that tenable [0] http://www.wolframalpha.com/input/?i=plot+0.5(1%2Bx)(1-x),+x(1-x)+for+x+%3D+0+to+1 http://www.wolframalpha.com/input/?i=plot+0.5(1%2Bx)(1-x),+x...
• lotsofpulp 9y ago
  In my experience, the basis of the article is not true at all. However, I have noticed that if you add something to your cart, and leave it there, then you quite often get an email from the merchant with an offer of a discount for buying the item.
  • _rpd 9y ago
    That's interesting, although I almost never give my email address to a merchant before committing to a purchase, it just invites an inbox full of spam.