5 ms·

In 2000, Amazon got caught doing price testing and the news was covered on all major blogs. Here is a link: http://news.cnet.com/2100-1017-245631.html http://ne

In 2000, Amazon got caught doing price testing and the news was covered on all major blogs. Here is a link: http://news.cnet.com/2100-1017-245631.html http://news.cnet.com/2100-1017-245631.html

mattmanser 16y ago
What's your source on a/b testing price on identical products being illegal? I've never heard that and none of the links provided in the comments so far justify your claim. It is a pretty extreme assertion and you provided no links justifying it either. I can see this rapidly turning into an urban myth, whispered wild eyed at 3am over ramen noodles as founders try and figure out a price for their product.
- davidw 16y ago
  I don't know if the other comment was edited, but he doesn't say anything about 'illegal'. People certainly found it distasteful though.
  - paraschopra 16y ago
    I think he wasn't referring to my comment but to my post where I write: "It’s illegal and can lead to huge potential lawsuit."
    - davidw 16y ago
      Oops, indeed. Hadn't seen who submitted the article. I think he's right though that there needs to be some linkage to "what you can and can't do, legally".
      - pinksoda 16y ago
        Depends what country your in really. Always check your local laws and regulations before taking advice on the internet; the laws for someone may not be the same as yours.
- deleted 16y ago
  [deleted]
- paraschopra 16y ago
  The concept is called "price discrimination". There is a great discussion going in this thread and I may be wrong at this. Even if it may not be illegal, it would leave a bad taste in your potential customers' mouth especially since there are better alternatives.
  - lionhearted 16y ago
    > The concept is called "price discrimination". Not quite - price discrimination is finding a way to take people with more money, and charge them more money. The challenge is, that prices people with less money out of the market - so price discrimination is about finding ways to justify cutting prices for some people while charging more to people who can afford more. Examples: Student discounts, senior citizen discounts, kid's meals, and matinee prices at movie theaters are all price discrimation. A/B testing prices is... just A/B testing prices. Though, the wise A/B price-tester does so by offering two different sales - one discounted product, and one more discounted product. This seems to minimize backlash - finding someone else got a better discount doesn't bother people as much as finding out they paid a higher price.
    - dtegart 16y ago
      Price discrimination doesn't have to be on just cutting prices, although it is often used this way to increase your potential pool of customers. I believe Amazon was using their knowledge of you purchase history, to decide if you were more likely to buy a product. If you were, the price would be higher.
- ekanes 16y ago
  I don't believe it's legal to charge different prices to different people for exactly the same product. Changing the price (for everyone) is fine (you could even change the price 5 times a day), or adding a back scratcher and bumping the price by $500 is fine, but doing an AB test where you flip the price back and forth on the same thing isn't legal as far as I know. IANAL.
  - roel_v 16y ago
    How would that be so? How do you 'believe' a factual thing like this? I can charge one guy 10$ for a pie in my bakery shop, and the next guy 100$ because I don't like his face. There is a narrow set of classes on which it is not allowed to discriminate but all else is fair game. I'm not claiming to know this of all jurisdictions, there may be specific circumstances in which this does not hold, but these are the exceptions.
    - ekanes 16y ago
      > There is a narrow set of classes on which it is not allowed to discriminate but all else is fair game. You're thinking about laws around hiring. I can't charge you double to buy a VCR in my store because I don't like your face.
      - roel_v 16y ago
        Why not?
  - nostrademons 16y ago
    Don't car dealerships do this all the time? Or small shops in Chinatown that negotiate for tourist souvenirs? Safeway or CVS cards? Google AdWords? Priceline.com? Employee/corporate discounts? Heck, on my recent trip to the Grand Canyon, my sister and I both checked out the exact same rental car through our respective employers, and it was about $30 cheaper through mine, presumably because my employer gives a better corporate discount than her employer. Really, anything where you negotiate the price will end up with different prices for the same item. You're thinking that just because people don't do it, it must be illegal. The idea of "one price for identical items" is a pretty recent invention, dating back to the rise of department stores (Woolworth's, Macy's, Sears) at the turn of the 20th century. It's for economic reasons, not legal ones. They found that it was cheaper to forego the extra revenue than it was to hire all the salespeople needed to negotiate each individual purchase. Charge less and make it up in volume. It also has the advantage of fairness and simplicity, which customers tend to like.

In 2000, Amazon got caught doing price testing and the news was covered on all major blogs. Here is a link: http://news.cnet.com/2100-1017-245631.html http://news.cnet.com/2100-1017-245631.html

mattmanser 16y ago

What's your source on a/b testing price on identical products being illegal? I've never heard that and none of the links provided in the comments so far justify your claim. It is a pretty extreme assertion and you provided no links justifying it either. I can see this rapidly turning into an urban myth, whispered wild eyed at 3am over ramen noodles as founders try and figure out a price for their product.

davidw 16y ago
I don't know if the other comment was edited, but he doesn't say anything about 'illegal'. People certainly found it distasteful though.
- paraschopra 16y ago
  I think he wasn't referring to my comment but to my post where I write: "It’s illegal and can lead to huge potential lawsuit."
  - davidw 16y ago
    Oops, indeed. Hadn't seen who submitted the article. I think he's right though that there needs to be some linkage to "what you can and can't do, legally".
    - pinksoda 16y ago
      Depends what country your in really. Always check your local laws and regulations before taking advice on the internet; the laws for someone may not be the same as yours.
deleted 16y ago
[deleted]
paraschopra 16y ago
The concept is called "price discrimination". There is a great discussion going in this thread and I may be wrong at this. Even if it may not be illegal, it would leave a bad taste in your potential customers' mouth especially since there are better alternatives.
- lionhearted 16y ago
  > The concept is called "price discrimination". Not quite - price discrimination is finding a way to take people with more money, and charge them more money. The challenge is, that prices people with less money out of the market - so price discrimination is about finding ways to justify cutting prices for some people while charging more to people who can afford more. Examples: Student discounts, senior citizen discounts, kid's meals, and matinee prices at movie theaters are all price discrimation. A/B testing prices is... just A/B testing prices. Though, the wise A/B price-tester does so by offering two different sales - one discounted product, and one more discounted product. This seems to minimize backlash - finding someone else got a better discount doesn't bother people as much as finding out they paid a higher price.
  - dtegart 16y ago
    Price discrimination doesn't have to be on just cutting prices, although it is often used this way to increase your potential pool of customers. I believe Amazon was using their knowledge of you purchase history, to decide if you were more likely to buy a product. If you were, the price would be higher.
ekanes 16y ago
I don't believe it's legal to charge different prices to different people for exactly the same product. Changing the price (for everyone) is fine (you could even change the price 5 times a day), or adding a back scratcher and bumping the price by $500 is fine, but doing an AB test where you flip the price back and forth on the same thing isn't legal as far as I know. IANAL.
- roel_v 16y ago
  How would that be so? How do you 'believe' a factual thing like this? I can charge one guy 10$ for a pie in my bakery shop, and the next guy 100$ because I don't like his face. There is a narrow set of classes on which it is not allowed to discriminate but all else is fair game. I'm not claiming to know this of all jurisdictions, there may be specific circumstances in which this does not hold, but these are the exceptions.
  - ekanes 16y ago
    > There is a narrow set of classes on which it is not allowed to discriminate but all else is fair game. You're thinking about laws around hiring. I can't charge you double to buy a VCR in my store because I don't like your face.
    - roel_v 16y ago
      Why not?
- nostrademons 16y ago
  Don't car dealerships do this all the time? Or small shops in Chinatown that negotiate for tourist souvenirs? Safeway or CVS cards? Google AdWords? Priceline.com? Employee/corporate discounts? Heck, on my recent trip to the Grand Canyon, my sister and I both checked out the exact same rental car through our respective employers, and it was about $30 cheaper through mine, presumably because my employer gives a better corporate discount than her employer. Really, anything where you negotiate the price will end up with different prices for the same item. You're thinking that just because people don't do it, it must be illegal. The idea of "one price for identical items" is a pretty recent invention, dating back to the rise of department stores (Woolworth's, Macy's, Sears) at the turn of the 20th century. It's for economic reasons, not legal ones. They found that it was cheaper to forego the extra revenue than it was to hire all the salespeople needed to negotiate each individual purchase. Charge less and make it up in volume. It also has the advantage of fairness and simplicity, which customers tend to like.