Prices that change by the second: Why searching for deals online isn't always worth it

Have you ever shopped online for the best possible deal, clicked the checkout button, walked away satisfied with your survey - only to find that someone else got the same thing in the same place for an even cheaper price?

This is the result of personalized pricing: also called "dynamic pricing" or "price discrimination depending on who you ask. By collecting data about your online habits and using algorithms to analyze that data, companies can charge you what they predict you are willing to pay for their goods and services. The catch is that it's not always the same as the lowest price they're willing to sell at. It may even be more than the market value of the thing you are buying.

The example you may be most familiar with is airfares. Two people sitting next to each other on the same flight could have bought their tickets on the same day, with the same fare conditions, but one could have paid more – sometimes significantly more – than the other.< /p>

But it doesn't just happen with airfares. These days, just about anything you buy online can be subject to this type of pricing. When you shop, companies can collect data about you and then use sophisticated analytics tools to make sure you never get the lowest available price.

Is it worth shopping online for bargains? The answer is complicated.

Dr. Rob Nicholls, associate professor of regulation and governance at UNSW Business School, says dynamic pricing has precedent. “Before about the 1870s, almost all prices were set by negotiation,” he says. "To quote Life of Brian, 'You're supposed to haggle!'" The price tag was invented in the late 19th century, "and it wasn't until it was widely adopted that the price charged deviated significantly from what the merchant thought the customer could afford to pay".

Dynamic pricing, in its most benign form, is the product of competitive markets, where companies react to demand, changing the price based on how many people want a product at any given time, and how many are available. Companies also compete for customers, so they may offer lower prices to gain a competitive advantage.

Nicholls says airlines have been using dynamic pricing since 1980s and that hotels adopted this practice in the early 2000s, "but only the large chains had sufficient data".

"However, the growth in sales online has created a much greater opportunity for dynamic pricing and, therefore, the risk of personalized pricing or price discrimination,” says Nicholls. , add big data and algorithmic decision making, and you get prices that change by the second, and rather than in response to supply and demand, they can fluctuate based on the unique habits of the buying customer. This can have perverse effects on the s consumers.

With the granular, individual data they use, a business can ensure that it is selling its goods and services at the maximum price it knows the customer is willing to pay, without them even knowing it is happening.

For example, if you are looking for a plane ticket and enter the same search for flights to the same destination on the same travel dates repeatedly, airlines may use this information to charge you more. Nicholls says this type of price discrimination is based on "your perceived need to travel on specific dates." The more requests you make using a specific set of dates, the more you perceive you are willing to pay for those dates.

Avoid legal custom pricing, as long as it doesn't cross the line of actual discrimination - for example, a retailer setting higher prices for people because of gender, disability, race, age or other protected characteristics.

So is there anything you can do to protect yourself from price discrimination? Nicholls says that when shopping online, "the best way to avoid price discrimination is to avoid leaving 'digital breadcrumbs.' Use your browser's "private mode" when searching or use a search engine that doesn't optimize for ads [like Duck Duck Go]."

You can also use middleman sites that aggregate product offerings and find the lowest price for you." [But] don't log on to comparison apps or sites until you have the price you're willing to pay. pay," says Nicholls. And always, always, clear your cookies.

Nicholls says you can also play the "name and shame game" if you have the feel like you've been targeted for price discrimination. "Let everyone you know know," he says. "This re...