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Dynamic Pricing: Use Chrome, Pay Less

A few weeks ago, I heard a very interesting piece on NPR’s On The Media about dynamic pricing. OTM interviewed Slate contributor Annie Lowrey, who summarized her earlier pre-holiday article about tactics used by online retailers to charge different customers different prices for the same products. This has nothing to do with varying regional taxes or membership pricing—this is straight up variable pricing (or as some call it “discriminatory pricing”) based on customer profiling. For example, let’s say you go to Barnes and Noble and add a book to your shopping cart for $12.95, but change your mind at the last moment and abandon it. Three weeks later, you come back and suddenly, that same DVD costs $15.95. Why? Because now, Barnes & Noble knows that you really want this item—so much so that you came back to buy it. So, they figure you’ll charge a bit extra since they know you’ve got your heart set on it.

But here’s the kicker:

Clear your cache and cookies or fire up BarnesandNoble.com on another browser and check out that same DVD with a clean slate and it’s back at $12.95.

This is all perfectly legal, as it arguably should be. Dynamic pricing works the other way, too. Let’s say you add some items to your shopping cart and abandon it, either to mull it over or see if you can get a better deal elsewhere. While you’re out shopping, the retailer might send you a quick email saying, “Look, we noticed you left some items in your cart—if you come back and go through with the purchase, we’ll knock off 10% and offer you free shipping.” It’s the closest you can get to haggling online, albeit with robots. If it’s fair at the car dealership, then why not at 1800flowers.com or Amazon.com?

You may not have noticed dynamic pricing, but I guarantee you it’s happening on the websites you regularly visit. The aforementioned Slate article cited a Consumers Union study that caught Barnes and Noble in the act back in 2007. Last year, Amazon acquired Amie Street, presumably to shut down the competing digital music service but also to reap their dynamic pricing technology.

Knowing that online retailers are gaming your shopping habits may leave you feeling miffed, but remember that, really, it’s the consumers who have been gaming the retailers for years by rigorously comparison shopping on the web. Who here has ever stood in the aisles of a big box store looking up product prices on their smartphones? And who here has ever used Priceline or Travelocity? Dynamic pricing is just another escalation in the online shopping arms race.

With that in mind, there are, of course, ways to game the system right back. One interesting comment that Lowrey made on OTM struck me in particular:

BROOKE GLADSTONE: And you also recommend – and this is a rare product endorsement – if you want to beat dynamic pricing, at least for the time being, it’s worthwhile not just to use a different browser but specifically to use Chrome, which now carries the connotation of being savvy.

ANNIE LOWREY: Yes so if you use a shmancier browser -

[LAUGHTER]

- a newer, a more tech-savvy browser like a Google Chrome, as opposed to something like Internet Explorer, yeah, there’s a chance [LAUGHS] that you might be quoted lower prices –

[BROOKE LAUGHS]

- for things, on some goods at least. [LAUGHS]

They glossed  over that comment very quickly, but the logic seems tenable. Google Chrome, while gaining in market share, has a user base that tends towards the early adopters and potential trend setters—the hipsters of the Internet, if you will (you can take that as self-congratulatory or not). It would make sense to offer discounts to Google Chrome users, since the technologically adventurous tend to be more evangelical about their new discoveries. It’s the same tactic that software developers use when offering previews and private beta testing opportunities to blog owners and those who are heavily active in social media channels.

There has been at least one documented case of Google Chrome users getting better deals than Firefox and Safari users, as highlighted by The Consumerist. Apparently, Capital One was offering car loan rates of 2.7% to Safari users, 2.3% to Chrome users, 3.1% to Opera users and 3.5% to Firefox users. Very interesting.

So, I guess the takeaway is this:

  1. Whenever you buy something online, let it stew in your cart for a few hours to see if you get any discounts.
  2. Use Chrome when shopping. If not for the tech-savvy discount, then for the Incognito mode which may help you sleuth out the actual prices of things.

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5 Responses to Dynamic Pricing: Use Chrome, Pay Less

  1. CW January 8, 2011 at 11:25 pm #

    Ah, yes, Amie Street. From the experience I had today with Amazon.com (they had raised the price of an item by over double after just a few page views), it seems they’ve learned how to use Amie’s dynamic pricing software quite well. Needless to say I didn’t buy.

    What I take away is this: while dynamic pricing is nothing new and completely legal, companies need to be careful not to behave too aggressively and risk offending their customers. Dynamic pricing could work in one’s advantage, but personally I’ve only heard negative comments stemming from it. Nobody likes being exploited. Nobody.

  2. CW January 8, 2011 at 11:32 pm #

    Thumbs up to Google Chrome, though. The numbers don’t lie. :-)

  3. chewbie January 15, 2011 at 9:36 am #

    ‘While your out shopping’ tsk tsk…

    thanks for the informative article! I never heard about this tactic and it’s shocking to me how they want to milk us for every cent.

    Although I’m a happy Chrome user who converted others to it I really can’t help but feel that there should be no discrimination between shoppers. Today it’s your browser – tomorrow it might be your perceived income or sexual preference or maybe even worse, your race.

    I’m okay with having gift cards given to the most loyal or active shoppers but this preliminary profiling does not fit well with me at all

    • groovinJackman January 16, 2011 at 5:35 pm #

      Agreed – I’m all for profiling as long as it benefits me. But now I have this constant sneaking suspicion that I’m paying too much for whatever I’m buying. Like there’s this super secret hidden price for non-suckers.

      And this practice has to backfire at some level.

      Anyway, thanks for the quick copy edit–fixed!

      • CW January 16, 2011 at 6:01 pm #

        Exactly. Now every time I browse around I’m always left feeling like like I’m paying too much. That certainly doesn’t benefit the customer. The comparison in the article here (people standing in the aisles of the big-box stores and comparing prices over the internet) doesn’t come close to touching whats actually happening here. This is similar to a situation where someone in a pricey vehicle pulls up to a store front and asks the clerk if he’s got something in stock. The clerk says he does, in the back of the store, but before the fellow with the pricey car can even turn around to walk back there and fetch it, the owner has already doubled the price on him with a Sharpie. Don’t like it? Too bad. That’s what going on here.

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