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Why would they stop working when everyone does it? The methods described might be new, but the underlying principle is simple and fundamental - charge customer
by whack 2y ago
Why would they stop working when everyone does it?
The methods described might be new, but the underlying principle is simple and fundamental - charge customers based on their willingness-to-pay. If customers are willing to pay $10 for your product, as opposed to $20, almost all businesses would take that into account when setting their prices.
In a low-tech world, you can only price stuff using one-size-fits-all. So you would price stuff based on something like median-willingness-to-pay. This puts your product out-of-reach for half its potential customers, while giving a big discount to the other half. The techniques described in the article are designed to "fix" the above - sell the product to as many people as possible, and give everyone a more even discount compared to their willingness-to-pay.
There is no reason for this strategy to stop working just because other companies are also doing it. In fact, it will only snowball once this practice becomes more commonly accepted.
In a macro sense, fine-grain-price-differentiation is undoubtedly in the best interests of all corporations. Whether they are in the best interests of consumers is more debatable. I'm guessing the answer is no. In theory, the best possible outcome is perfect price differentiation, coupled with increased corporate tax rates (or capital gains tax rates) that are used to lower income tax rates. I doubt this will happen anytime soon.
- Turing_Machine 2y ago> Why would they stop working when everyone does it? If everyone does it, it's a de facto cartel. Cartels generally end when one of the members breaks ranks and starts selling the product for less than the agreed-upon cartel price and vacuuming up all the customers. The result is often a price war.
- DataDive 2y agoIt stops working as more people understand the tricks. Trust works only when most actors are trustworthy. Once you know the prices are jacked up just for "you", and once you know you are being "played," you behave differently and resist. That is the point I am making, true value + gamification = price, but the gamification part is the quickest to do away with.
- etrautmann 2y agoYes, but that just changes your price sensitivity (potentially all the way to 0 if you refuse). There might be some ringing or chaotic dynamics in the price discovery dynamic system but a sufficiently advanced algorithm could take that into account. Still dystopian depending on your perspective.
- whack 2y ago> Once you know the prices are jacked up just for "you", and once you know you are being "played," you behave differently and resist. This isn't true. If you find out that only Tesla is customizing their car-price for you personally, you may decide to boycott Tesla. But what are you going to do if every single car company does the same thing? Boycott all cars and take the bus? Hence my point that price-personalization works even better when more companies do it, not less.