
We bet you $10K that we will outperform your pricing strategy - jmarbach
https://modernpricing.com/blog/posts/how-to-become-your-companys-growth-hero
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dahdum
Looks like they use a JS library, so users will be able to detect the usage of
this service in most cases.

Few will do so, but those that realize it will be your most vocal detractors.
Consumers _despise_ dynamic pricing.

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PostOnce
Dynamic pricing means the company is trying as hard as possible to give you
the worst deal possible, and people resent it because it's insulting.

Basically, instead of "thank you", it's "fuck you".

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bko
It could work the other way. How many times have you seen a product or service
found it interesting and saw the price and was immediately turned off? Or if
you're shopping for a product and you could convey that information to the
retailer, they might lower their price. This is the same idea as searching for
coupon codes to put in during checkout.

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orasis
I’d like to second this comment. The only reason you can fly economy for so
cheap is because first class is so expensive.

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dahdum
First class and economy are different experiences. Airlines don’t change your
price for economy based on your personal information.

Would you like to have to pay more because you live in an affluent zip code,
even if you aren’t affluent yourself? Because of your age, relationship
status, income, wealth, education, friends, and more?

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futhey
> We process the IP address and user agent for each new visitor to your
> website, then we predict the maximum price level where each visitor is
> willing to buy.

Whoa. I think if my customers found out about this I would have a real problem
on my hands.

And since my customers are all IT admins, it seems like they might figure it
out.

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londons_explore
Customers are much more tolerant of there being a fixed high price, and some
customers being offered a voucher code for 'loyalty' or whatever.

People are fine with being given a discount, but don't like to be charged a
premium.

Industries like car insurance have done differential pricing for decades, and
consumers have come to accept it.

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Pumafied
In my opinion they accept it because they are forced to. I live in an area
where the public transit is not built out and my economic opportunities would
be drastically limited by not having a car so once a month I unhappily pay
more than my peers because of some teenage mistakes.

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Akinato
This seems like it's pretty unethical. I'm not a fan. Surge pricing only
really (sort of) makes sense to me for resources that can be temporarily at
capacity, as a means of prioritization of customers.

Even that is kind of scummy.

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zwaps
Here is the wikipedia article on the theoretical basis:
[https://en.wikipedia.org/wiki/Price_discrimination](https://en.wikipedia.org/wiki/Price_discrimination)

Many forms of price discrimination, like menu pricing or 2-part tariffs, as
well as group pricing, are used every day. This, however, is an attempt at
first-order price discrimination enabled by near-perfect tracking of users. It
is then unclear to what degree this may or not be illegal, or will be in the
future.

Important to keep in mind is that it "hurts" the consumers in the sense they
can no longer get a theoretical surplus. Therefore consumers would have to
change their mindset about purchasing things. Goods would have to be bought
more with a mindset of filling "necessities", because on average we, the
consumers, would lose surplus compared to firms.

So naturally, this has the potential to piss off consumers, either if they
have the intuition, or understand what price discrimination does.

Edit: As for the legality, I can give the following advice. First, be very
careful about how you classify consumers, because many group-based
discriminations (such as gender) that are implicitly used by ML algorithms,
are definitly illegal.

Second, price discrimination in the "normal world" often points to having
monopoly power. Currently, there is no good eqivalent for the internet world,
because many monopoly tests fail by default (for example, entry). That is why
I believe the EU or the US will eventually legislate against this form of
personalized pricing to protect consumers.

It is a grey zone now because, for example, the EU legislates that illegality
necessitates a) a monopolistic position and b) using it to hurt consumer
surplus or block competition. For internet companies, with some big platforms
being the exception, the test for a) fails by default.

This differs from country to country, but because the algorithms can only
infer purchasing power based on characteristica, I believe that they will be
made illegal (in the EU) based on the respective constitutional laws that make
discrimination based on these properties illegal, and I do not think
monopolistic postitions will be necessary.

That means even a small internet start-up should be careful.

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perl4ever
"Second, price discrimination in the "normal world" often points to having
monopoly power"

Something I think is underappreciated, or at least I don't notice people
mentioning explicitly, is that the state of being a monopoly intensifies the
shorter the time horizon for making a deal. If you want something within the
next 100 years, nothing is a monopoly. If you have an online shopping basket
that you're about to order, even the most abundant commodity has a privileged
position relative to the competition.

Companies are increasingly realizing they can utilize discriminatory pricing
in proportion to the amount of commitment demonstrated by a customer. For
instance, if you are in a store, you will likely pay a significant premium
rather than go to another store, even if they were on equal footing when you
were at home. If you are checking out, you will likely pay a premium rather
than start all over. If you have a membership... and so on.

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londons_explore
I would like to see a system able to give me the derivative of price tolerance
vs various factors.

For example, browser type, advert viewed, various on-site AB tests, etc.

It could collect all this data via two prices (eg. $12.99 and $13.99) and
looking at the conversion rate for each.

I could totally collect this data myself, but I would like someone else to
build a system to measure it, and present it in graphs with confidence
intervals.

Pretty much this service, but in 'advise only' mode.

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starbugs
Can anyone shed some light on whether using a service like this may be a legal
concern? I recently read that at least in the EU dynamic/personalized pricing
can be illegal if it discriminates groups based on certain criteria.

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zwaps
Yes, this is what economists simply call price discrimination and for any
normal business it is definitly illegal.

This is a grey zone now, but it will be decided that either it is illegal now,
or it will be made illegal eventually.

So I'd be careful with this kind of stuff.

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perl4ever
It's pervasive, and nobody's made an effective case that it's illegal outside
of basing it on protected classes of people.

For instance, you can detect whether someone browsing your website on their
phone is in your physical store and if so, show them the same higher prices
that are in the store. But if someone is not in your store, you can show them
lower prices to compete online. I've noticed retailers doing this. At least
sometimes, they try to defuse it by matching the lower price _if_ a customer
notices the game.

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crb002
Discriminatory pricing. What could possibly go wrong?

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bluesign
Criteria for selection includes but is not limited to:

Traffic: > 100K uniques/month

Test period: 6 months minimum

Existing pricing strategy: static

