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My Price is Not Your Price

My Price is Not Your Price - The Beacon

11-2014

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By: Michael

My Price is Not Your Price

Your BBB recently reported on the FTC getting involved in online pricing.

In 2010, it came to light that companies were charging different shoppers different prices for the same items. The practice, called price differentiation or price discrimination, is a way online retailers can make some extra money by personalizing the results of consumers’ online searches. In 2012, the Wall Street Journal reported stores charging different prices according to customers’ geographic location, and showing browsers from Mac computers more expensive hotel options than people using PCs, according to researchers at Northeastern University.

The academic folks wondered how widespread the price discrimination and steering were, what customer information companies use in the process, and how much prices change when e-commerce websites personalize search results and/or prices.

The researchers collected the search results of consumers using their own browsers. They compared those with an automated browser running the same searches simultaneously but without storing cookies, the little information packets that show what websites computers have visited. They studied 16 online retailers and travel sites and found that seven practiced price discrimination.

There’s a whole industry that’s grown around online searches; because every consumer’s search pattern is unique, the researchers were unable to say which factors trigger personalization. They did come up with some interesting findings when they looked at which browsers (Chrome, Firefox, and Internet Explorer) and platforms (Windows, OSX, iOS, Android) were used.

They also considered whether shoppers were logged into a user account and their history of purchases. The researchers created one fake account to book low-priced hotels and rental cars, and another for expensive hotel rooms and rental cars. They found that a marketing strategy called A/B tests were used to steer some users toward pricier hotels.

Visitors were assigned to groups A, B or C depending on the cookies saved on their computers. Searchers in groups A and B were shown hotels costing $187 per night on average, and users in group C saw hotels averaging $170 a night.

One company selling home repair items charged twice the amount on average to those using mobile devices vs. those browsing from their home computers.

Among the researchers’ recommendations: comparison shop, using your normal desktop browser, a private browser window and a mobile device. Since cookies help create customer profiles, deleting those cookies might give you less biased search results. Or, with cookies enabled, leave an item in your shopping cart without buying; a competitor may cut the price to lure you. Consider using a price tracker, which tracks an items pricing history for either a single store, or multiple stores. In the future, other factors may trigger personalization.

Follow the links to read the Bangor Daily News Article: How Online Sales Firms Steer Shoppers Toward Higher Prices or to Read the Northeastern University study (PDF) .

Visit Your BBB for great money-saving tips.

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Michael

Michael is our Business Information Specialist and will be writing at least one article per week for the consumer education blog. He works with accredited businesses to ensure we maintain current contact information and licensing. He is usually first to answer the phone; so odds are good you will be speaking with him when calling our office.