Amazon.com got “caught” doing it…some e-tailers are claiming it’s the wave of the future…different pricing according to a shoppers desire for a product and that consumers “means”.
http://www.washingtonpost.com/wp-dyn/articles/A15159-2000Sep25.html
Thoughts?
Pisses me off; everything’s going to be a blind auction.
If you find the this pricing system objectionable, the obvious solution is (stay with me here) to object.
So free enterprise and the free exchange of information actually seems to work. Go figure…
I see no reason why people should expect or have the right to the same price. If you see a price and agree to pay it then that is between you and the retailer. We’re not talking about necessities here. Sure it is disconcerting to find out someone paid less, but apparently the price you were offered was a fair exchange in your mind so you agreed.
Great. So they claim they’ve stopped and won’t do it again. But how are we to trust companies who think like this:
It won’t work becasue people will find out? Not because it’s a dishonest thing to do. Not because it’s unethical. It’s only wrong because people will find out. That’s great.
I think I’m going to go live in a cave.
I know for a fact (and that will probably get me into trouble) that the Victoria’s Secret Catalog contains different prices depending on where you live.
This is not a new practice.
Tretiak;
I disagree with you about it being a fair exchange. The reason for that is that in the case of dynamic pricing (don’t ya just love these marketing terms?), the consumer has no idea that the price is flexible.
If I’m in a market in Bhagdad, I know there is going to be bargaining. And I know that the merchant’s starting price was decided upon by his perceptions of me (foriegn, lots of money, clueless about the fair market value of this jug). I know that the price he gives me is not fixed, and I am free to bargain with him from there. If a better haggler comes along later and gets the same jugs for less, that’s OK–it’s the nature of the game and all the players know it.
This is not the case with Dynamic Pricing. Several quotes from the Washington Post article demonstrate the seller’s keen awareness that the flexible pricing must be kept secret from the consumer in order for the system to work. The plan is to make the customer believe that the price shown is a fixed price, which they would not attempt to argue with. Seriously, when was the last time you haggled with Amazon? It is not fair becasue the consumer is laboring under the false assumption that the price is the price–period.
Now, if they want to be honest about what they’re doing and open all sales up to negotiation–fine with me. What they are doing now is decietful.
Actually, the interesting thing about this is that it is likely not the beginning, but rather the end of dynamic pricing. We’ve lived with this scheme for as long as there have been car salesmen. It’s been a fact of life and nobody complained too much.
Enter Coke, they look to take advantage of this tried and true method of maximizing profits by charging more for sodas in hot weather. Customers get wind of the scheme and go ape, Coke exec gets canned.
Next up, Amazon, who charge seeimingly random prices for DVDs. Customers wise up, and pow, instant PR nightmare.
Think about it, how many times have you heard the phrase “No haggle pricing” in car commercials in the last few years? How many times did you hear it in the 80s?
What the internet brings more than anything else is information. People can instantly compare deals and any discrepancies will be quickly noticed. I bet that within the next few months, you’ll see whole sites devoted to tracking prices individual people paid for stuff.
I think that the bias of the article notwithstanding, this is really a boon for the consumer. Yeah, Amazon can collect a whole lot of information about you and what you like. That’s good, they’re more likely to carry the stuff you want. But better yet, you can find out a tremendous amount of information about Amazon as well. I mean, it took these guys a few minutes to figure out that Amazon was charging different prices for the same stuff.
Retailers have long had the upper hand when it came to information. They kept voluminous customer databases to track buying habits. Now the tables have turned and consumers have access to a wealth of information about retailers. 'bout time.
Plus, as soon as people figure out a company is using dynamic pricing, some smart fellow (or fellette) will figure out a way to beat the system and always get the lower price. I mean, come on, these dynamic pricing shemes are based on (probably) simple algorithms and should be easy to reverse engineer. Zap, profits plummet, and dynamic pricing is history.
Like the Amazon PR drone said, “dynamic pricing doesn’t work because people will find out”.
Bingo.
gEEk
Lucky,
Who says they are negotiating? They are offering you a product at a price. You can refuse to buy it at that price or accept. If you are accept then obviously the price is fair in your mind. No one is being cheated. Whether or not the price is flexible or whether you know this or not is hardly relevant, IMO.
Tretaik;
It’s unfair because they are changing the rules of the game without informing the players.
People assume that prices are fixed in these situations. As they should. This is how business has been conducted (with a few exceptions). If sellers are going to change their prices according to what they feel the customer is willing to pay, and they are going to do this without informing the customer, they are being dishonest. The customer based his decision to purchase while operating under the false premise that the price was fixed. If the customer knew that the price was not based on cost to the store+profit+overhead, etc., but rather on a detailed analysis of his buying habits and income, I believe his decision to purchase would be affected.
It is obvious that the sellers also feel this way, as they state without reserve that the system will not work if the customers know about it. If it’s so above board, why the need to lie about it?
Lucky
No shit, Sherlock. Dynamic pricing is stupid, obnoxious, and unfair. It’s also impossible because of the free exchange of information. They did it, they got caught, they got burned, they stopped. If they try to do it again, they’ll get caught again, and burned even more severely.
What’s your point here? Unusual or creative sales systems should be illegal unless previously approved by the government? ((blinks)) Such a scheme would be impractical at best. I may be liberal but I’m not stupid.
Stores that will refund money if the item goes on sale within 3 weeks or match competion’s advertised price are doing the same thing.
It may be obnoxious and stupid, but how in the world is it unfair? I still don’t see this.
It’s not unfair.
Dynamic priceing exists all over the place. They guy that sits next to you on the plane probably pain a hundred bucks less for his seat. Are the airlines ethically required to tell you there is a better price? No. Hotels, cars and any variety of things do the same.
More relevently, dynamic priceing occurs geographicly. A soda in Sacramento costs less than a soda in Los Angeles. A beer in a nice bar costs less than a beer from a corner store. A beer in an amusment park cost even more.
I dont understand how militant capitalists still get angry at the laws of supply and demand. Its set up so that people charge as much as they can get away with. Either you support capitalism or you dont, you cant only support it when it works for you.
If people dont want to be gouged they ought to compare prices (it is really really easy online). They can also choose to shop at sites that say “We dont do dynamic priceing” if it is that important to them. If enough people do that, then dynamic priceing will die out. Thats how our charished system works.
Joe Malik;
Can the attitude. Did you read the thread? Tretiak was positing that dynamic pricing is fair. I was rebutting. Jeez.
even sven;
In the examples you sited, the customer is aware that different prices are availble. Everyone knows that air ticket prices, hotel prices, car prices vary. Because they are armed with this knowledge, they can make informed decisions. In the case of dynamic pricing, the idea is to not let the consumer know that there is variable pricing, thus greatly reducing the chances that he will shop around. This is what makes the practice unfair.
Your preminition that some sites may begin to advertise that they do not do dynamic pricing is, IMO, right on target and would likely be the death of dynamic pricing. I know that this is how our “cherished system works”, and I am glad for it. But the debate, as I saw it, was whether or not dynamic pricing was a fair/good practice; not how capatalism would deal with it.
As for a beer costing more in an upscale place than it does at the corner bar, again, the customer is aware of this and knows the reason for it. In the upscale place you are paying for the ambiance, better wait staff, more interesting decor, etc. It is the consumer’s choice to spen his/her money on what is of value to him/her–more beer for the buck or more snobbery for the buck. Informed choice.
Geographic dynamic pricing is a little stickier, but still more honest. Prices are varied on this basis because in some areas the market can bear a higher cost and in some areas it cannot. And people know this. You know that a cup of coffee and a bagle is going to cost you more in New York than in Chicago. This information is going to factor into your decision about where to live (at least, if you are fiscally responsible it will).
I understand the argument that geographic dynamic pricing is no different than individual consumer dynamic pricing. After all, what the “market” can bear has simply been scaled down to the level of what the individual’s “market” can bear. Fine. Tell people you’re doing that, and I have no problem. Intentionally hide this information from the consumer in the hopes they won’t find out and you can gouge them? Foul.
Merchant’s have always had the upper hand in transactions. They are armed with more information than the consumer. They know their profit margin, wholesale cost of goods, average income of the community they serve, demographics of their consumers, general buying habits, etc. Now that it is possible for them to compile this information about individual customer’s, it stacks the deck waaaay too much in their favor. Our system worked, in this case, because people found out about the dirty little secret. But can we count on that always happening? I don’t know.
I think the point is that one store from the same place is charging different prices to different people. Yes I know that plane tickets, hotels and stuff like that can be different prices. But what if you walked into a store with me and we both bought the same item at the same time, but the manager came up to you and put a higher price tag on it? wouldn’t like it to much then huh?
I also know a beer costs more at the bar so I dont go there and buy beer. Kinda sounds like my college days when they would jack up the prices of books by 50% even when they where already marked by the publisher.
the comparision to airline pricing is not relevant. all you see is that the person sitting next to you has paid more [or less] than you. but each fare paid comes with a substantially different set of restrictions, including whether you may change or refund the ticket.
Good point, Dix
I don’t remember all the circumstance, but I recall in the early days of the railroad the railroad would charge different farmers different amounts of money to transport their crops to market. This gave those railroads, as monopolies, the ability to put any farmer out of business so they could turn around and buy that farmers land, then sell the land to someone who wouldn’t then have to pay all the fees.
There was a law passed against such practices.
No quite the same thing here.
So businesses have discounts for seniors, discounts for kids, discounts for women, discounts for minorities, discounts for everyone in sight except sailors. I say there oughtta be a law!
Why should I pay full price when the creaky old lady doesn’t?