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How Retailers Use Personalized Prices

257 points by hrasyid 9y ago

huffpopo 9y ago
Retailers who ask customers if they would like to donate to charity after a sale are using it as a test to see if they can raise prices.
- PenguinCoder 9y ago
  They also use it as a tax write off...
  - fjsolwmv 9y ago
    How? It's not their money in the first place so collecting deducting it just goes back to zero.
    - whathaschanged 9y ago
      Does the money go directly to a charity? Or do they collect it on behalf of a charity and then donate it to said after end of business (or 4-8 weeks)? Electronic transactions are abused far more by companies/corporations compared to kids picking up a water jug of pennies.
      - icebraining 9y ago
        I'm sure they collect it for a while, but that doesn't mean they can declare it as their own for tax purposes.
  - waegawegawe 9y ago
    I'm not so sure about that. Citation? I believe in general (at least in the US), it would be really unusual for a corporation to get a tax break for money that was never theirs. The chief factor in how corporations are taxed in the US is their domestic profit. Whether you donate to charity or light it on fire, it shouldn't matter at all to the corporation's profit, and therefore it shouldn't matter to their taxes. I'm happy to be convinced otherwise, though. Let me know.
  - gnicholas 9y ago
    (former) tax lawyer here. This is definitely not possible, at least in the US. They could only take a deduction if they first recognized the donation as income — which would defeat the purpose and also be a very odd way of characterizing the transaction.
- adamzerner 9y ago
  Do you know this, or are you assuming this? It is certainly possible that, at the margin, someone is willing to spend money on a charity but not spend that same money on the product. Although I suppose there's probably a correlation between donating and willingness to pay more.
  - Spooky23 9y ago
    It’s a way to test shoppers and evaluate their willingness to add a marginal dollar for spending. That can be correlated against buying behavior and taking advantage of discounts. Right now, for a grocery store, that means they can put butter on sale that women will buy for Christmas cookie making, and market sprinkles and decorative sugar at higher prices (or with a coupon) to increase customer value. That MDA heart that you bought on Labor Day weekend helps assess the effectiveness of that sort of promotion.
    - njarboe 9y ago
      I really like Trader Joe's that does not do all of this segmented pricing, sales, and coupons. I wonder if they can survive without all that in the long run. Maybe with having mostly store brands it will work out for them.
      - kuschku 9y ago
        ALDI (the company behind Trader Joe’s) has been doing without ads, segmented pricing, or coupons for half a century and became one of Europe’s largest retailers. I’m sure they’ll stay competitive in the future.
        germanier 9y ago
        In their German home turf they started a huge ad campaign last year (their first ever except for a weekly newspaper ad) and even started to discount some of their regular product lines. Maybe the days they could survive without all that are over?
- fjsolwmv 9y ago
  That seems like a very weak and noisy signal compared to, you know, directly changing prices, which they do all the time.
  - tmnvix 9y ago
    Changing the price first has the disadvantage of possibly losing the sale.
  - huffpopo 9y ago
    Going by industry gossip it is a very strong signal. Strong enough to be worth while even though they know customers hate it.
  - BurningFrog 9y ago
    But this is data for an INDIVIDUAL person!
- DrScump 9y ago
  I don't think grocery retailers "raise prices" across the board. I think the "charity bundling" concept is just for P.R. The company presents the big check at the end of the campaign, and the public then credits the company, even if the company itself contributed nothing beyond a little (deductible) personnel time. The Ronald McDonald House perfected that mechanism. Some retailers used to do the same with pooling customer MDA donations, then showing up to the telethon with a big check... with the company name on it.
  - DrScump 9y ago
    BTW, I'm not opposed to this mechanism if the retailer is matching customer contributions.
    - gnicholas 9y ago
      Often they tout that donations are matched. In the fine print, they disclose that there's a limit to the matching. So if the limit is low, then the "matching" concept is effectively illusory.
- bogomipz 9y ago
  Do you have a citation for this? What is this statement based on?
dogruck 9y ago
Some stores offer coupons and price matching guarantees to attract price sensitive customers. Some stores tout that every customer gets "the same low price." A new facet on the old games.
- sharemywin 9y ago
  just a whole lot faster and bunch more data mining.
  - dogruck 9y ago
    I remember reading a data science research paper in the early 1990s that explained how Walmart had created a massive database containing all point-of-sale records. The data was stored in a relational database, and Walmart was mining it to be nimble with prices.
laxatives 9y ago
There must be some incredible data being mined by Amazon via Whole Foods. At the Whole Foods in Palo Alto, there seems to be an elaborate pricing experiment in the ice cream department. Entire brands (Talenti) are dropped in price 70%. Other times, particular flavors are reduced that much, sometimes less so. For Talenti, the entire brand is sold out. Some of the on-sale flavors go quickly or are also sold out while others are completely ignored, despite the discount (namely anything from Three Twins, who's blurb on their ice cream and their shop at SFO make them sound like assholes). Maybe 25% of the options in that section are discounted, and the amount of discounts varies as well, with a number of different steps like (80%, 50%, 35%, 20%, 10% or similar). Nothing else in the shop is stratified like that. Beer and wine might have 2% of the options on sale. Ditto produce and meat. Most departments offer no discounts.
- mjmahone17 9y ago
  Alternatively: Amazon has decided certain brands won't be carried anymore. Therefore those brands are getting steep discounts to clear the stock and Wholefoods' legacy contracts quickly.
- cosmie 9y ago
  To your point on beer and wine: state liquor licensing boards control retail pricing structures pretty heavily. In Tennessee for example (the state I’m most familiar with), the price of beer can be set at whatever, but liquor can’t be sold below cost and wine can’t be sold below a 20% markup over cost. It makes discounting a bit tricky, to ensure you stay compliant. Especially if you already have competitive pricing.
  - icantdrive55 9y ago
    I didn't know that about wine. It's not going to affect my wine buys. I only buy their $2.49 bottle. Amazon raised the price to $2.99 (it's a terrible wine. The better palates buy the pricey stuff. To me it's just medicine. So please don't buy it.) Now to Amazon lower prices: They systematically raised everything in the stores a few cents to a few dollars. Believe me, I know. I know their price of rice, butter, milk, bread, gluten fee this/that. Somedays I get dizzy looking at ingredients. Somedays I need to pop a Klonopin in the bathroom just to get out of there. I have a Grandmother who is hypnotized into shopping there. Every Sunday I take her there. I get pretty much the same stuff for her weekly. I have been shopping there for 10 plus years. "They raised priced? Here, here you troll. The boy genius lowered prices?" Yes--he told his managers use a few sales items as Lost Liters. There's about 10-20 sales items that are a good deal. Bananas come to mind. I can only eat a few bananas before they go bad, but you can freeze them. They are 29 cents a lb. At Costco you could feed a family of monkeys for $1.29. My point is Amazon, so far, has done nothing to reverse, "Whole Paycheck", at least so far. Probally more than you ever wanted to know about WF's prices? (Is it still better than dealing with angry help at Safeway--sadily yes. It's too bad Safeway managed to piss off every employee in the corporation, and fill those stores up with so much Signature salty crap.)
ben1040 9y ago
Orbitz also played with how they rank search results. After finding Mac users were likely to spend 30% more on a nightly room rate, they started putting higher priced rooms at the top when Mac users searched. http://www.npr.org/sections/thetwo-way/2012/06/26/155756095/orbitz-shows-mac-users-pricier-hotel-options-big-deal-or-no-brainer http://www.npr.org/sections/thetwo-way/2012/06/26/155756095/...
- bubblethink 9y ago
  I'm waiting for the day my Linux browser agent string pays off. So far, I've only seen random sites refusing to work for no good reason.
  - ozpri 9y ago
    this.
  - vostok 9y ago
    I wonder if Linux users spend more or less. I can definitely imagine that American Linux users are wealthier than Americans in general if you exclude non-traditional distributions (Chrome OS, Android, etc.) from the Linux category.
    - clydethefrog 9y ago
      In the beginning of Humble Bundle (pay want you want for a collections of games for all platforms) they showed the average price paid per platform. Linux was always the highest.
      - hiram112 9y ago
        I doubt this had little to do with any relationship between linux users and their likelihood of overpaying on a hotel room or rental car. The price paid by Linux users was almost certainly bumped up by Linux gamers explicitly trying to support game studios who supported Linux. You wouldn't see the same thing with hotel rooms or most other products that weren't intimately tied to the OS itself.
bluetwo 9y ago
So their basic premise is a lie.... "We find you the lowest price"... In fact they are finding the lowest prices, then trying to maximize the amount you pay for it. Disgusting.
- mgkimsal 9y ago
  > "We find you the lowest price"... "We find you the lowest price (that we think you'll actually purchase)". FTFY?
  - jimmaswell 9y ago
    Supply and demand except on the individual level?
    - njarboe 9y ago
      Yes. This if a very old concept and everything used to be sold this way in the market place. No price tags or signs anywhere. Learn how to haggle and try and get the friend discount.
bo1024 9y ago
At some point in the next 5 years, I predict there will online services that will "proxy-shop" for you. They will specialize in building profiles (cookies, logins, etc) that get offered low prices, then use these to purchase products on your behalf. Perhaps a browser plugin, so that at the moment you go to check out on a product, you send the product's link to the service and they get it for you at a lower price. Then retailers will attempt to bring legal challenges against them for breaking terms of service, that will be interesting...
- tessierashpool 9y ago
  These services already exist, although I don’t believe they use the implementation you describe. Instead they’re basically coupon collectors. They just find the lowest available price and route you to it, or something like that. (I don’t use any of them, but they advertize to me relentlessly. I should probably try them out, actually.)
  - bo1024 9y ago
    That's interesting. Are they actually using personalization to get better prices? I'm thinking of scenarios where if two different browsers visit the same page, they'll get shown different prices depending on their cookies etc. In that case, a third-party site can't really "route you" to a lowest available price, they have to help you make the purchase from the right browser environment.
- astura 9y ago
  So a travel agent? What's old is new again, I guess.
  - deleted 9y ago
    [deleted]
  - mysterypie 9y ago
    > So a travel agent. Travel agents were never on the side of the consumer. If you asked travel agents who they perceived they were working for, they'd tell you it's the airlines. This is not just my opinion; in travel industry magazines, articles, etc., this definitely was their stance. They'd choose flights for you that were most profitable for themselves and/or the airlines (and those two factors coincide nicely). Even pre-web, I almost always found a better prices by phoning the airlines directly if I wanted to spend the time.
nimbius 9y ago
Or in other words...price discrimination as a service
samblr 9y ago
I have recently learnt it is same with energy companies. My monthly contract prices were hiked up to get more out of heating bill for energy company. I was left disgusted since we live in a relatively warm house and energy bills are minimal. After spending an hour with support - it became clear that prices are tailor made for postcode - read each individual home.
- jldugger 9y ago
  At least where I live, gas and electric are pretty heavily regulated, and fees are itemized to where I can tell you how much I pay per kilowatt for decomissioning hydroelectric dams. PG&E does offer equal payment plans, where you pay the same amount every month, but they still track usage and bill/credit you every year for the difference between their estimate and your reality.
firefoxd 9y ago
Slightly related. I regret not having taken a screenshot to prove it, but oh well. A friend and I both open google.com and type weather. We are on the same Wifi, both using chrome, both signed in, and we each get our very own current temperature for the exact same city. Different by a few degrees that is. We hard refresh, we sign out, we clear cookies, still different on each machine. With personalisation I wonder if they go as far as telling you how hot it feels for me as opposed to how hot it is.
- shostack 9y ago
  How would they know how hot it feels for you? Have you given any input on that?
  - firefoxd 9y ago
    I complain a lot about the weather near my phone, who knows maybe someone is actually listening for once :)
- wallacoloo 9y ago
  I'd be more inclined to believe your queries were just handled by different servers that had cached different sets of data. Seems more likely if you had different DNS settings than your friend, too.
shubhamjain 9y ago
The extent of my profile that can be built (and is probably available) is absolutely insane. Picture this: most people use a single email ID to register anywhere. Dating sites, e-commerce, social networks, banks, and even offline stores. My online purchases can be linked with my preferences on OKCupid that can be linked to ads I am clicking that can be linked to my offline behaviour. Personalised pricing is direct result of that. Who knows what other interactions are being shaped by it. Because the power of having this profile is limitless. There's a Gmail trick to avoid it by using "+random_name" suffix but that is easy enough to circumvent. Disposable email IDs are banned from most sites and I never found it easy to integrate in my workflow. I have been pondering about building a service that acts as a mask to your real email ID, can be configured to forward emails to your real ID and can work with your personal domain name. I know some people who are running similar kind of setup here; a service might be helpful for those who don't might not want to go through the trouble.
- c22 9y ago
  I do this with one of my domains. Setting it up was just adjusting some forwarding preferences in my registrar's web interface. Not sure how a separate service could make this easier, I'd presumably still have to login to my registrar to point an mx record at it.
- blfr 9y ago
  Whether on Google Apps or using Exim, all my domains have a catch all address so emails to unmatched local names (addresses) are sent to a single inbox. I then use servicename@mydomain.tld for registration at each service. It's not much more difficult to circumvent than gmail's +randomname but a little fuzzier. There's no way to know from the outside how many people are using each domain.
  - EGreg 9y ago
    It is good to use +randomname for another reason: so customer service departments can't be tricked into giving up your data, since the attacker can't even guess your login id.
- 9y ago
ChuckMcM 9y ago
I expect this to have a large downside in that it introduces a negotiable element into the price. And as such you'll see it become mandatory that you negotiate (just as frequent flier miles became mandatory) and as a result margins will decrease.
- ubernostrum 9y ago
  Also, while people here are thinking mostly about retailers like Amazon, I'd say that even with all the data they have and the processing and engineer power they throw at it, they still haven't caught up to the airlines in terms of efficiency at determining how much people are willing to pay for something. Airline yield management -- which includes both setting the price buckets for different fare classes, and deciding which flights/routes get allocated certain numbers of seats in different fare classes -- is a dark art. And in case someone happening by is confused by that, I'm not talking about economy class versus first class here. In the US, for example, there may be a dozen or more different fare classes which all book the same type of seat in the same cabin of the same aircraft, but which have different prices attached to them. This is the source of a lot of (inaccurate) advice to do things like booking tickets on certain days of the week or at certain times to try to get the lowest price. Airlines dynamically allocate and re-allocate differently-priced fare classes to flights all the time, and unless you really really know what you're doing, have time (which isn't free) to spend on it and pay (which also isn't free, obviously) for a service that lets you scan inventory by fare class, you're not going to reliably get the lowest price. For example, by my count currently American has 14 fare classes which initially book into the economy cabin (and with different rules about how and whether they upgrade to a different one), Delta has 15, and United has 17. These vary by level of discount, restrictions on change/refund, who they're offered to (Delta has some which are known to be explicitly a "we only use this to indicate a fare where we're trying to price-match another airline on the same route", for example, and all three have fares for things like government and military travel), etc. and price differently.
  - nopzor 9y ago
    Yeah airlines "yield management" and "pricing" departments are indeed a black art. But, by and large, they're still not "personalizing" pricing. Instead they are basing pricing on factors like demand, destination, whether you're doing a Saturday stay (business travelers wont, so they'll charge more), how close you are to departure, etc etc. Plus they're now tweaking their frequent flier programs as a way to encourage people not to buy the "absolute cheapest" fare available. I recently booked a delta flight from sfo to San Juan, connecting in jfk. Got off in jfk and "missed" my flight. Saved over $1000 versus buying a ticket on the same flight from sfo to jjfk.
blfr 9y ago
In Poland an easy way to get a lower price is to go through price comparison engine like Ceneo[1]. Many retailers will offer significant discounts to users specifically looking for the lowest price. [1] https://www.ceneo.pl/ https://www.ceneo.pl/
efrafa 9y ago
Not exatcly the same, but if you fly with norwegian, booking ticket through Norway locale will sometimes save you more than 25%.
veraxe 9y ago
https://veraxe.com/school-mobile-app https://veraxe.com/school-mobile-app mobile app for schools india
csmuluern 9y ago
Hello :)?
rahulchowdhury 9y ago
Guess, will have to use a cheap phone to book my flight tickets next time. :-P
whazor 9y ago
In some hotels, when paying less for a room, you might actually get a worse room. Some rooms have cracking beds or bad wifi reception. That is why you might find different prices for similar rooms in a hotel.
aorth 9y ago
Slightly related: I was just looking to buy Microsoft Office 2016 for Mac for my mother. She's American, but I'm currently in Bulgaria. The Microsoft web store says it's $149 but when I add it to my cart it becomes 289 Bulgarian Leva, which is about $174 (and the whole page annoyingly switches to the Bulgarian language). Then I look on Amazon.com and see you can get it for $129. God I hate digital software pricing.
- cjg_ 9y ago
  Seems like the price difference easily can be explained by the 20% VAT rate in Bulgaria?
  - aorth 9y ago
    Ah, indeed!
bricss 9y ago
I may guess that is Booking.com doing the same stuff.
- devdas 9y ago
  I'm sure they would love to, but they don't hold inventory or set pricing.
smn1234 9y ago
so this is retailers doing "a/b testing" across different devices to see how much money they can happen to squeeze out of you depending on which experience you're willing to use to complete the transaction? Is mobile shopping costlier because of added cost to build the mobile app? Is it because mobile users don't do as much comparative research? Is it throwing a dart in the dark to hope mobile users are least likely to have time to shop around and will purchase given limited time to make a decision?
Macha 9y ago
I wonder how sustainable some of these approaches are and how often people will just stop buying from places that prey on them too much. For example, I'll often end up paying more for e.g. flights if it's not too costly and it removes the hassle of comparing days/large numbers of airlines to save 50 bucks. But if they started charging me double what others were paying, I'd just stop using that airline. Likewise, I've noticed a similar behaviour with ads on youtube. If you always click the skip ad button, you'll always get the 15s unskippable ads, or 30s ads. But when I stopped for a while (because a lot of the channels I watch are solely supported by them), YouTube kept pushing the line until it was showing 5 minute ads for 10 minute videos. So now I skip them again to avoid the gradual creeping increase in ad length.
- jstanley 9y ago
  I refuse to participate in YouTube's opaque ad selection system. If the video has an ad, even if it's skippable after 5s, I don't watch the video. I very rarely get shown ads.
  - deleted 9y ago
    [deleted]
  - Spivak 9y ago
    Why not get an ad blocker? Good for attention, privacy, and security.
    - jstanley 9y ago
      I do on my computer, but I watch a lot of YouTube on my phone. I ran AdBlock Plus for a while until I discovered that it runs as an open proxy, allowing anyone on the same wifi network as you to fetch content through your phone. In combination with a VPN client that routes everything over the VPN, I considered that an unacceptable risk.
      - Spivak 9y ago
        Firefox for Android has extension supprort and in particular uBlock origin support. Same as your desktop browser.
Nokinside 9y ago
Several pricing methods together for close to optimal price discrimination. 1. Scientific experiment to determine the price. With enough customers, it's possible to determine optimal price level using scientific method. Vary the price and see how it affects demand and discover what customers are willing to pay. 2. Divide customers into segments, and apply scientific pricing into segments. Segmenting can be heuristic based on devices used and behaviour. 3. Personalization comes last. It's segmentation in the finest level. If user be identified, his social networks analyzed etc, it's possible to model his behaviour and determine users price sensitivity and how the user perceives value. Triggering purchase decision can be personalized. For some people showing generated review or rating helps to make a decision, for some you need to show purity values (images of people in white clothes in the sun), for some you must indicate that they are able to "win" over the seller. Access to the mobile gaming data with in app purchases is massive leg up in personal profiling. Data from mobile gaming can be used to experiment and model personal behaviour and personality.
- hnhg 9y ago
  You need scale for all of these, right? How would you start with an entirely new product or service with no previous presence in the market? I guess you could look at similar products but if you're targeting a new market entirely, you might have no assurances that your assumptions are correct.
  - Nokinside 9y ago
    You revert back to more traditional pricing methods. Pricing was advanced field even before the internet. Everyone doing it should first study pricing at least few days to get a feel and ideas and to know what kind of pricing methods to use and how to determine the initial price and how to change it.
    - hnhg 9y ago
      What are they, out of interest? Is there a good primer anywhere online?
timthelion 9y ago
The best way to avoid being manipulated in this way is to stop buying things.
golemotron 9y ago
I'm surprised no one is talking about how progressive this is. Rich people (or people who signal 'rich') pay more and facilitate discounting at the low end. Companies discount to increase marketshare.
rahimnathwani 9y ago
Summary: Except for auto dealerships, retailers don't use personalized prices. What a terrible article: 1) Its first example of "personalized pricing" isn't actually personalised: it was the result of an A/B test. 2) It says 'Outsize profits can be extracted from “top of the demand curve” customers' when, in fact, the top of the demand curve is normally when price is zero. The author seems to acknowledge this as they reference 'the downward sloping demand curve highlighted in Economics 101'. 3) The only convincing example given in the article is that of 'auto dealerships', which are the least typical retailers there are. People hate going to auto dealerships, but they love doing other types of shopping, in-person or online. Part of the reason is the personalized pricing (and process of haggling), but this has existed for many years, and the rise of the internet has actually made it easier for consumers, not harder, to get a reasonable deal. 4) "A key question is whether personalized pricing, on the web or in-store, is ethical." A better question would be 'How do retailers use personalized prices?'. That's the question I thought would be answered, given the title. The author's answer seems to be "Except for auto dealerships, they don't".
- daveFNbuck 9y ago
  The A/B test only explained the comparison between apps. The spokeswoman said they personalize based on web vs mobile app and logged in vs logged out.
  - rahimnathwani 9y ago
    That's not personalisation. Many (most?) people use both web and mobile. And do you always remember to log in before you do a search on Orbitz? Or are you sometimes logged in and sometimes not?
- zeamaize 9y ago
  You can get personalized cell service prices. I walk into Verizon yearly and threaten to walk if they don’t give me a discount. I pay about 60% normal price. You don’t cost Verizon anything, you are pure profit (up to a point). They are authorized to give discounts for retention. Always be sure you walk in with a competitors price to beat too (ask T-Mobile and AT&T what they will give you to switch).
yalogin 9y ago
Is this legal? Can they really code in a different price based on the end user's profile? That sounds super shady to me. I know there have long been suspicions that Amazon does this but I thought all of them turned to be false. If a company as big as Orbitz is doing it, are there other companies that do it too? I am surprised this has not come out sooner.
LarryMade2 9y ago
On a related note - Recently I've noticed that pricing, or more specifically menu selection, is also happening in brick and mortar shops. Going to a McDonald's, I noticed their menu boards went displaying children's meals or value items during my last visit - looking around the window and floor ads, I did see mention of discount items available but nothing in the menu-board slideshow.. Didn't think of asking at the time, thought it was odd, now I have come to realized they were gaming me for higher sales items. Now will stick to establishments with printed menus and non-video menu boards.

257 points by hrasyid 9y ago

Retailers who ask customers if they would like to donate to charity after a sale are using it as a test to see if they can raise prices.

PenguinCoder 9y ago
They also use it as a tax write off...
- fjsolwmv 9y ago
  How? It's not their money in the first place so collecting deducting it just goes back to zero.
  - whathaschanged 9y ago
    Does the money go directly to a charity? Or do they collect it on behalf of a charity and then donate it to said after end of business (or 4-8 weeks)? Electronic transactions are abused far more by companies/corporations compared to kids picking up a water jug of pennies.
    - icebraining 9y ago
      I'm sure they collect it for a while, but that doesn't mean they can declare it as their own for tax purposes.
- waegawegawe 9y ago
  I'm not so sure about that. Citation? I believe in general (at least in the US), it would be really unusual for a corporation to get a tax break for money that was never theirs. The chief factor in how corporations are taxed in the US is their domestic profit. Whether you donate to charity or light it on fire, it shouldn't matter at all to the corporation's profit, and therefore it shouldn't matter to their taxes. I'm happy to be convinced otherwise, though. Let me know.
- gnicholas 9y ago
  (former) tax lawyer here. This is definitely not possible, at least in the US. They could only take a deduction if they first recognized the donation as income — which would defeat the purpose and also be a very odd way of characterizing the transaction.
adamzerner 9y ago
Do you know this, or are you assuming this? It is certainly possible that, at the margin, someone is willing to spend money on a charity but not spend that same money on the product. Although I suppose there's probably a correlation between donating and willingness to pay more.
- Spooky23 9y ago
  It’s a way to test shoppers and evaluate their willingness to add a marginal dollar for spending. That can be correlated against buying behavior and taking advantage of discounts. Right now, for a grocery store, that means they can put butter on sale that women will buy for Christmas cookie making, and market sprinkles and decorative sugar at higher prices (or with a coupon) to increase customer value. That MDA heart that you bought on Labor Day weekend helps assess the effectiveness of that sort of promotion.
  - njarboe 9y ago
    I really like Trader Joe's that does not do all of this segmented pricing, sales, and coupons. I wonder if they can survive without all that in the long run. Maybe with having mostly store brands it will work out for them.
    - kuschku 9y ago
      ALDI (the company behind Trader Joe’s) has been doing without ads, segmented pricing, or coupons for half a century and became one of Europe’s largest retailers. I’m sure they’ll stay competitive in the future.
      - germanier 9y ago
        In their German home turf they started a huge ad campaign last year (their first ever except for a weekly newspaper ad) and even started to discount some of their regular product lines. Maybe the days they could survive without all that are over?
fjsolwmv 9y ago
That seems like a very weak and noisy signal compared to, you know, directly changing prices, which they do all the time.
- tmnvix 9y ago
  Changing the price first has the disadvantage of possibly losing the sale.
- huffpopo 9y ago
  Going by industry gossip it is a very strong signal. Strong enough to be worth while even though they know customers hate it.
- BurningFrog 9y ago
  But this is data for an INDIVIDUAL person!
DrScump 9y ago
I don't think grocery retailers "raise prices" across the board. I think the "charity bundling" concept is just for P.R. The company presents the big check at the end of the campaign, and the public then credits the company, even if the company itself contributed nothing beyond a little (deductible) personnel time. The Ronald McDonald House perfected that mechanism. Some retailers used to do the same with pooling customer MDA donations, then showing up to the telethon with a big check... with the company name on it.
- DrScump 9y ago
  BTW, I'm not opposed to this mechanism if the retailer is matching customer contributions.
  - gnicholas 9y ago
    Often they tout that donations are matched. In the fine print, they disclose that there's a limit to the matching. So if the limit is low, then the "matching" concept is effectively illusory.
bogomipz 9y ago
Do you have a citation for this? What is this statement based on?

dogruck 9y ago

Some stores offer coupons and price matching guarantees to attract price sensitive customers. Some stores tout that every customer gets "the same low price." A new facet on the old games.

sharemywin 9y ago
just a whole lot faster and bunch more data mining.
- dogruck 9y ago
  I remember reading a data science research paper in the early 1990s that explained how Walmart had created a massive database containing all point-of-sale records. The data was stored in a relational database, and Walmart was mining it to be nimble with prices.

laxatives 9y ago

There must be some incredible data being mined by Amazon via Whole Foods. At the Whole Foods in Palo Alto, there seems to be an elaborate pricing experiment in the ice cream department. Entire brands (Talenti) are dropped in price 70%. Other times, particular flavors are reduced that much, sometimes less so. For Talenti, the entire brand is sold out. Some of the on-sale flavors go quickly or are also sold out while others are completely ignored, despite the discount (namely anything from Three Twins, who's blurb on their ice cream and their shop at SFO make them sound like assholes). Maybe 25% of the options in that section are discounted, and the amount of discounts varies as well, with a number of different steps like (80%, 50%, 35%, 20%, 10% or similar). Nothing else in the shop is stratified like that. Beer and wine might have 2% of the options on sale. Ditto produce and meat. Most departments offer no discounts.

mjmahone17 9y ago
Alternatively: Amazon has decided certain brands won't be carried anymore. Therefore those brands are getting steep discounts to clear the stock and Wholefoods' legacy contracts quickly.
cosmie 9y ago
To your point on beer and wine: state liquor licensing boards control retail pricing structures pretty heavily. In Tennessee for example (the state I’m most familiar with), the price of beer can be set at whatever, but liquor can’t be sold below cost and wine can’t be sold below a 20% markup over cost. It makes discounting a bit tricky, to ensure you stay compliant. Especially if you already have competitive pricing.
- icantdrive55 9y ago
  I didn't know that about wine. It's not going to affect my wine buys. I only buy their $2.49 bottle. Amazon raised the price to $2.99 (it's a terrible wine. The better palates buy the pricey stuff. To me it's just medicine. So please don't buy it.) Now to Amazon lower prices: They systematically raised everything in the stores a few cents to a few dollars. Believe me, I know. I know their price of rice, butter, milk, bread, gluten fee this/that. Somedays I get dizzy looking at ingredients. Somedays I need to pop a Klonopin in the bathroom just to get out of there. I have a Grandmother who is hypnotized into shopping there. Every Sunday I take her there. I get pretty much the same stuff for her weekly. I have been shopping there for 10 plus years. "They raised priced? Here, here you troll. The boy genius lowered prices?" Yes--he told his managers use a few sales items as Lost Liters. There's about 10-20 sales items that are a good deal. Bananas come to mind. I can only eat a few bananas before they go bad, but you can freeze them. They are 29 cents a lb. At Costco you could feed a family of monkeys for $1.29. My point is Amazon, so far, has done nothing to reverse, "Whole Paycheck", at least so far. Probally more than you ever wanted to know about WF's prices? (Is it still better than dealing with angry help at Safeway--sadily yes. It's too bad Safeway managed to piss off every employee in the corporation, and fill those stores up with so much Signature salty crap.)

ben1040 9y ago

Orbitz also played with how they rank search results. After finding Mac users were likely to spend 30% more on a nightly room rate, they started putting higher priced rooms at the top when Mac users searched. http://www.npr.org/sections/thetwo-way/2012/06/26/155756095/orbitz-shows-mac-users-pricier-hotel-options-big-deal-or-no-brainer http://www.npr.org/sections/thetwo-way/2012/06/26/155756095/...

bubblethink 9y ago
I'm waiting for the day my Linux browser agent string pays off. So far, I've only seen random sites refusing to work for no good reason.
- ozpri 9y ago
  this.
- vostok 9y ago
  I wonder if Linux users spend more or less. I can definitely imagine that American Linux users are wealthier than Americans in general if you exclude non-traditional distributions (Chrome OS, Android, etc.) from the Linux category.
  - clydethefrog 9y ago
    In the beginning of Humble Bundle (pay want you want for a collections of games for all platforms) they showed the average price paid per platform. Linux was always the highest.
    - hiram112 9y ago
      I doubt this had little to do with any relationship between linux users and their likelihood of overpaying on a hotel room or rental car. The price paid by Linux users was almost certainly bumped up by Linux gamers explicitly trying to support game studios who supported Linux. You wouldn't see the same thing with hotel rooms or most other products that weren't intimately tied to the OS itself.

bluetwo 9y ago

So their basic premise is a lie.... "We find you the lowest price"... In fact they are finding the lowest prices, then trying to maximize the amount you pay for it. Disgusting.

mgkimsal 9y ago
> "We find you the lowest price"... "We find you the lowest price (that we think you'll actually purchase)". FTFY?
- jimmaswell 9y ago
  Supply and demand except on the individual level?
  - njarboe 9y ago
    Yes. This if a very old concept and everything used to be sold this way in the market place. No price tags or signs anywhere. Learn how to haggle and try and get the friend discount.

bo1024 9y ago

At some point in the next 5 years, I predict there will online services that will "proxy-shop" for you. They will specialize in building profiles (cookies, logins, etc) that get offered low prices, then use these to purchase products on your behalf. Perhaps a browser plugin, so that at the moment you go to check out on a product, you send the product's link to the service and they get it for you at a lower price. Then retailers will attempt to bring legal challenges against them for breaking terms of service, that will be interesting...

tessierashpool 9y ago
These services already exist, although I don’t believe they use the implementation you describe. Instead they’re basically coupon collectors. They just find the lowest available price and route you to it, or something like that. (I don’t use any of them, but they advertize to me relentlessly. I should probably try them out, actually.)
- bo1024 9y ago
  That's interesting. Are they actually using personalization to get better prices? I'm thinking of scenarios where if two different browsers visit the same page, they'll get shown different prices depending on their cookies etc. In that case, a third-party site can't really "route you" to a lowest available price, they have to help you make the purchase from the right browser environment.
astura 9y ago
So a travel agent? What's old is new again, I guess.
- deleted 9y ago
  [deleted]
- mysterypie 9y ago
  > So a travel agent. Travel agents were never on the side of the consumer. If you asked travel agents who they perceived they were working for, they'd tell you it's the airlines. This is not just my opinion; in travel industry magazines, articles, etc., this definitely was their stance. They'd choose flights for you that were most profitable for themselves and/or the airlines (and those two factors coincide nicely). Even pre-web, I almost always found a better prices by phoning the airlines directly if I wanted to spend the time.

nimbius 9y ago

Or in other words...price discrimination as a service

samblr 9y ago

I have recently learnt it is same with energy companies. My monthly contract prices were hiked up to get more out of heating bill for energy company. I was left disgusted since we live in a relatively warm house and energy bills are minimal. After spending an hour with support - it became clear that prices are tailor made for postcode - read each individual home.

jldugger 9y ago
At least where I live, gas and electric are pretty heavily regulated, and fees are itemized to where I can tell you how much I pay per kilowatt for decomissioning hydroelectric dams. PG&E does offer equal payment plans, where you pay the same amount every month, but they still track usage and bill/credit you every year for the difference between their estimate and your reality.

firefoxd 9y ago

Slightly related. I regret not having taken a screenshot to prove it, but oh well. A friend and I both open google.com and type weather. We are on the same Wifi, both using chrome, both signed in, and we each get our very own current temperature for the exact same city. Different by a few degrees that is. We hard refresh, we sign out, we clear cookies, still different on each machine. With personalisation I wonder if they go as far as telling you how hot it feels for me as opposed to how hot it is.

shostack 9y ago
How would they know how hot it feels for you? Have you given any input on that?
- firefoxd 9y ago
  I complain a lot about the weather near my phone, who knows maybe someone is actually listening for once :)
wallacoloo 9y ago
I'd be more inclined to believe your queries were just handled by different servers that had cached different sets of data. Seems more likely if you had different DNS settings than your friend, too.

shubhamjain 9y ago

The extent of my profile that can be built (and is probably available) is absolutely insane. Picture this: most people use a single email ID to register anywhere. Dating sites, e-commerce, social networks, banks, and even offline stores. My online purchases can be linked with my preferences on OKCupid that can be linked to ads I am clicking that can be linked to my offline behaviour. Personalised pricing is direct result of that. Who knows what other interactions are being shaped by it. Because the power of having this profile is limitless. There's a Gmail trick to avoid it by using "+random_name" suffix but that is easy enough to circumvent. Disposable email IDs are banned from most sites and I never found it easy to integrate in my workflow. I have been pondering about building a service that acts as a mask to your real email ID, can be configured to forward emails to your real ID and can work with your personal domain name. I know some people who are running similar kind of setup here; a service might be helpful for those who don't might not want to go through the trouble.

c22 9y ago
I do this with one of my domains. Setting it up was just adjusting some forwarding preferences in my registrar's web interface. Not sure how a separate service could make this easier, I'd presumably still have to login to my registrar to point an mx record at it.
blfr 9y ago
Whether on Google Apps or using Exim, all my domains have a catch all address so emails to unmatched local names (addresses) are sent to a single inbox. I then use servicename@mydomain.tld for registration at each service. It's not much more difficult to circumvent than gmail's +randomname but a little fuzzier. There's no way to know from the outside how many people are using each domain.
- EGreg 9y ago
  It is good to use +randomname for another reason: so customer service departments can't be tricked into giving up your data, since the attacker can't even guess your login id.
9y ago

ChuckMcM 9y ago

I expect this to have a large downside in that it introduces a negotiable element into the price. And as such you'll see it become mandatory that you negotiate (just as frequent flier miles became mandatory) and as a result margins will decrease.

ubernostrum 9y ago
Also, while people here are thinking mostly about retailers like Amazon, I'd say that even with all the data they have and the processing and engineer power they throw at it, they still haven't caught up to the airlines in terms of efficiency at determining how much people are willing to pay for something. Airline yield management -- which includes both setting the price buckets for different fare classes, and deciding which flights/routes get allocated certain numbers of seats in different fare classes -- is a dark art. And in case someone happening by is confused by that, I'm not talking about economy class versus first class here. In the US, for example, there may be a dozen or more different fare classes which all book the same type of seat in the same cabin of the same aircraft, but which have different prices attached to them. This is the source of a lot of (inaccurate) advice to do things like booking tickets on certain days of the week or at certain times to try to get the lowest price. Airlines dynamically allocate and re-allocate differently-priced fare classes to flights all the time, and unless you really really know what you're doing, have time (which isn't free) to spend on it and pay (which also isn't free, obviously) for a service that lets you scan inventory by fare class, you're not going to reliably get the lowest price. For example, by my count currently American has 14 fare classes which initially book into the economy cabin (and with different rules about how and whether they upgrade to a different one), Delta has 15, and United has 17. These vary by level of discount, restrictions on change/refund, who they're offered to (Delta has some which are known to be explicitly a "we only use this to indicate a fare where we're trying to price-match another airline on the same route", for example, and all three have fares for things like government and military travel), etc. and price differently.
- nopzor 9y ago
  Yeah airlines "yield management" and "pricing" departments are indeed a black art. But, by and large, they're still not "personalizing" pricing. Instead they are basing pricing on factors like demand, destination, whether you're doing a Saturday stay (business travelers wont, so they'll charge more), how close you are to departure, etc etc. Plus they're now tweaking their frequent flier programs as a way to encourage people not to buy the "absolute cheapest" fare available. I recently booked a delta flight from sfo to San Juan, connecting in jfk. Got off in jfk and "missed" my flight. Saved over $1000 versus buying a ticket on the same flight from sfo to jjfk.

blfr 9y ago

In Poland an easy way to get a lower price is to go through price comparison engine like Ceneo[1]. Many retailers will offer significant discounts to users specifically looking for the lowest price. [1] https://www.ceneo.pl/ https://www.ceneo.pl/

efrafa 9y ago

Not exatcly the same, but if you fly with norwegian, booking ticket through Norway locale will sometimes save you more than 25%.

veraxe 9y ago

https://veraxe.com/school-mobile-app https://veraxe.com/school-mobile-app mobile app for schools india

csmuluern 9y ago

Hello :)?

rahulchowdhury 9y ago

Guess, will have to use a cheap phone to book my flight tickets next time. :-P

whazor 9y ago

In some hotels, when paying less for a room, you might actually get a worse room. Some rooms have cracking beds or bad wifi reception. That is why you might find different prices for similar rooms in a hotel.

aorth 9y ago

Slightly related: I was just looking to buy Microsoft Office 2016 for Mac for my mother. She's American, but I'm currently in Bulgaria. The Microsoft web store says it's $149 but when I add it to my cart it becomes 289 Bulgarian Leva, which is about $174 (and the whole page annoyingly switches to the Bulgarian language). Then I look on Amazon.com and see you can get it for $129. God I hate digital software pricing.

cjg_ 9y ago
Seems like the price difference easily can be explained by the 20% VAT rate in Bulgaria?
- aorth 9y ago
  Ah, indeed!

bricss 9y ago

I may guess that is Booking.com doing the same stuff.

devdas 9y ago
I'm sure they would love to, but they don't hold inventory or set pricing.

smn1234 9y ago

so this is retailers doing "a/b testing" across different devices to see how much money they can happen to squeeze out of you depending on which experience you're willing to use to complete the transaction? Is mobile shopping costlier because of added cost to build the mobile app? Is it because mobile users don't do as much comparative research? Is it throwing a dart in the dark to hope mobile users are least likely to have time to shop around and will purchase given limited time to make a decision?

Macha 9y ago

I wonder how sustainable some of these approaches are and how often people will just stop buying from places that prey on them too much. For example, I'll often end up paying more for e.g. flights if it's not too costly and it removes the hassle of comparing days/large numbers of airlines to save 50 bucks. But if they started charging me double what others were paying, I'd just stop using that airline. Likewise, I've noticed a similar behaviour with ads on youtube. If you always click the skip ad button, you'll always get the 15s unskippable ads, or 30s ads. But when I stopped for a while (because a lot of the channels I watch are solely supported by them), YouTube kept pushing the line until it was showing 5 minute ads for 10 minute videos. So now I skip them again to avoid the gradual creeping increase in ad length.

jstanley 9y ago
I refuse to participate in YouTube's opaque ad selection system. If the video has an ad, even if it's skippable after 5s, I don't watch the video. I very rarely get shown ads.
- deleted 9y ago
  [deleted]
- Spivak 9y ago
  Why not get an ad blocker? Good for attention, privacy, and security.
  - jstanley 9y ago
    I do on my computer, but I watch a lot of YouTube on my phone. I ran AdBlock Plus for a while until I discovered that it runs as an open proxy, allowing anyone on the same wifi network as you to fetch content through your phone. In combination with a VPN client that routes everything over the VPN, I considered that an unacceptable risk.
    - Spivak 9y ago
      Firefox for Android has extension supprort and in particular uBlock origin support. Same as your desktop browser.

Nokinside 9y ago

Several pricing methods together for close to optimal price discrimination. 1. Scientific experiment to determine the price. With enough customers, it's possible to determine optimal price level using scientific method. Vary the price and see how it affects demand and discover what customers are willing to pay. 2. Divide customers into segments, and apply scientific pricing into segments. Segmenting can be heuristic based on devices used and behaviour. 3. Personalization comes last. It's segmentation in the finest level. If user be identified, his social networks analyzed etc, it's possible to model his behaviour and determine users price sensitivity and how the user perceives value. Triggering purchase decision can be personalized. For some people showing generated review or rating helps to make a decision, for some you need to show purity values (images of people in white clothes in the sun), for some you must indicate that they are able to "win" over the seller. Access to the mobile gaming data with in app purchases is massive leg up in personal profiling. Data from mobile gaming can be used to experiment and model personal behaviour and personality.

hnhg 9y ago
You need scale for all of these, right? How would you start with an entirely new product or service with no previous presence in the market? I guess you could look at similar products but if you're targeting a new market entirely, you might have no assurances that your assumptions are correct.
- Nokinside 9y ago
  You revert back to more traditional pricing methods. Pricing was advanced field even before the internet. Everyone doing it should first study pricing at least few days to get a feel and ideas and to know what kind of pricing methods to use and how to determine the initial price and how to change it.
  - hnhg 9y ago
    What are they, out of interest? Is there a good primer anywhere online?

timthelion 9y ago

The best way to avoid being manipulated in this way is to stop buying things.

golemotron 9y ago

I'm surprised no one is talking about how progressive this is. Rich people (or people who signal 'rich') pay more and facilitate discounting at the low end. Companies discount to increase marketshare.

rahimnathwani 9y ago

Summary: Except for auto dealerships, retailers don't use personalized prices. What a terrible article: 1) Its first example of "personalized pricing" isn't actually personalised: it was the result of an A/B test. 2) It says 'Outsize profits can be extracted from “top of the demand curve” customers' when, in fact, the top of the demand curve is normally when price is zero. The author seems to acknowledge this as they reference 'the downward sloping demand curve highlighted in Economics 101'. 3) The only convincing example given in the article is that of 'auto dealerships', which are the least typical retailers there are. People hate going to auto dealerships, but they love doing other types of shopping, in-person or online. Part of the reason is the personalized pricing (and process of haggling), but this has existed for many years, and the rise of the internet has actually made it easier for consumers, not harder, to get a reasonable deal. 4) "A key question is whether personalized pricing, on the web or in-store, is ethical." A better question would be 'How do retailers use personalized prices?'. That's the question I thought would be answered, given the title. The author's answer seems to be "Except for auto dealerships, they don't".

daveFNbuck 9y ago
The A/B test only explained the comparison between apps. The spokeswoman said they personalize based on web vs mobile app and logged in vs logged out.
- rahimnathwani 9y ago
  That's not personalisation. Many (most?) people use both web and mobile. And do you always remember to log in before you do a search on Orbitz? Or are you sometimes logged in and sometimes not?
zeamaize 9y ago
You can get personalized cell service prices. I walk into Verizon yearly and threaten to walk if they don’t give me a discount. I pay about 60% normal price. You don’t cost Verizon anything, you are pure profit (up to a point). They are authorized to give discounts for retention. Always be sure you walk in with a competitors price to beat too (ask T-Mobile and AT&T what they will give you to switch).

yalogin 9y ago

Is this legal? Can they really code in a different price based on the end user's profile? That sounds super shady to me. I know there have long been suspicions that Amazon does this but I thought all of them turned to be false. If a company as big as Orbitz is doing it, are there other companies that do it too? I am surprised this has not come out sooner.

LarryMade2 9y ago

On a related note - Recently I've noticed that pricing, or more specifically menu selection, is also happening in brick and mortar shops. Going to a McDonald's, I noticed their menu boards went displaying children's meals or value items during my last visit - looking around the window and floor ads, I did see mention of discount items available but nothing in the menu-board slideshow.. Didn't think of asking at the time, thought it was odd, now I have come to realized they were gaming me for higher sales items. Now will stick to establishments with printed menus and non-video menu boards.