Geertjan's Blog

  • November 28, 2014

Highly Personalized Pricing Structures

Geertjan Wielenga
Product Manager

At Droidcon, beginning of this week, the main thing I learned was during a conversation in the hallway right at the end of the conference. According to the two guys I was talking with:

  • When you go to Booking.com, the price you're offered for your booking depends on whether you own an Android or an iPhone. This can be determined in dozens of different ways, e.g., the searches you do on-line. Apparently iPhone users are wealthier than Android users. Therefore, Booking.com offers a higher price to you if you're an iPhone user but, of course, you'll never know the difference because you're not shown the price offered to the Android user.

  • When you go to Amazon.com, the price you're offered for a product depends on whether you've searched for the same product on competing sites. I.e., if you've already searched for the book you're looking at on Amazon on some other book-related site, Amazon offers you a lower price, i.e., attempts to undersell the competition. But, of course, you'll never know that was the reason for the price of the book since you'll assume the price you're seeing is the same for everyone.

I'm sure they factor into the equation that the above perspectives aren't always correct. For example, an Android user might be wealthier than an iPhone user, but out of principles, e.g., related to open source for example, might base their decision on something other than wallet size, while simultaneously the iPhone user might be less wealthy while valuing the iPhone as a status symbol and might therefore pay more for a mobile device than wallet size would suggest. Etc.

Aside from the error factor at play, there's another way of looking at this scenario, assuming it is true—look at it as a progressive measure whereby the wealthy subsidize the purchases of those with thinner wallets. Again, though, factor in that not everyone fits the analysis and that you may not have been doing comparison-shopping when looking at competing sites for similar products.

And yet another way of looking at this is to see it as part of the larger trend of individualization, e.g., nowadays people don't watch TV but go to YouTube or other on-line channels for entertainment, choosing a highly individual entertainment track. However, here they have a choice. I don't like the idea of others choosing for me, e.g., deciding that I'm wealthier and thus offering me higher prices, without telling me about it.

Then again, all of this assumes that the two random guys in the hallway at Droidcon weren't talking rubbish. But, if it isn't happening already, it soon may be. Maybe a way around it all is to have different devices where you do different kinds of searches to confuse the analyzers. Or just go to the good 'ol travel agent and bookstore, instead of booking and buying on-line, if you can still find them, that is.

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