Gotcha: Your willingness-to-pay is showing …

Punch line: Major retailers are customizing online prices for each user, using users’ information (such as location) to determine different prices for identical items. The goal: higher price realization and higher profits. 

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Here's the scoop ...

 

It was the same Swingline stapler, on the same Staples.com website.

But for Kim Wamble, the price was $15.79, while the price on Trude Frizzell’s screen, just a few miles away, was $14.29. 

A key difference: where Staples seemed to think they were located.

A Wall Street Journal investigation found that the Staples website displays different prices to people after estimating their locations.

More than that, Staples appeared to consider the person’s distance from a rival brick-and-mortar store – If rival stores were within 20 miles or so, Staples.com usually showed a discounted price.

Staples acknowledges that it varies its online and in-store prices by geography because of “a variety of factors” including “costs of doing business.”

For years, the Internet, with its promise of quick comparison shopping, has granted people a certain power over retailers. At the click of a button, shoppers could find a better deal elsewhere, no travel required.

But the idea of an unbiased, impersonal Internet is fast giving way to an online world that, in reality, is increasingly tailored and targeted.

Websites are adopting techniques to glean information about visitors to their sites, in real time, and then deliver different versions of the Web to different people.

Prices change, products get swapped out, wording is modified, and there is little way for the typical website user to spot it when it happens.

What economists call price discrimination — when companies offer different prices to different people based on their perceived willingness to pay — is commonplace.

Movie theaters give senior-citizen discounts. One traveler’s willingness to pay top dollar for an airplane seat might mean other people will pay less.

It is difficult for online shoppers to know why, or even if, they are being offered different deals from other people.

Many sites switch prices at lightning speed in response to competitors’ offerings and other factors, a practice known as “dynamic pricing.”

Other sites test different prices to “map the demand curve” and find the sweet-spot price that maximizes profitability.

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Excerpted from WSJ’s, “Websites Vary Prices, Deals Based On Users’ Information”

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One Response to “Gotcha: Your willingness-to-pay is showing …”

  1. Bob DAaCuz Heflin Says:

    The Houston Astros are using their style of “Dynamic” pricing for certain baseball games. Depending upon the team the Astros are playing the price per ticket could be double a standard (read DOG) game even though the Astros suck.
    Houston Rockets have another twist. Single game tix are released for only a few months ahead purchase. this allows them to adjust the prices of future games. Season Tix holders still get a decent bargain. An upstairs season ticket is $15 per seat. If you bought that same ticket at the box office the day of the game it would cost $40.
    Da Cuz

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