If you want to ensure that you are able to get the best prices on your desired goods when shopping online, this guide will discuss the key steps to changing your shopping habits to avoid price discrimination.

WHAT IS DYNAMIC PRICING?

Dynamic pricing is a method that companies use to align the cost of products with the current demand for them. This means that the more views that a certain product gets, the more likely that the price of this product will increase. As a consumer, if you regularly look at a product more than once, the online demand for this product will increase, and dynamic pricing will ensure that when you come to buy this product, it will be at a higher cost than when you first viewed the item. Companies determine this demand through your browser history and location to understand your buying habits and adapt their costs towards these. These are often collected through software and tools such as cookies, which are able to track and analyse your buying habits and how companies can take advantage of these. However, there are many methods that allow you too avoid the pitfalls of dynamic pricing and make sure that you are offered a reasonable price.

HOW TO AVOID DYNAMIC PRICING

If you want to avoid dynamic pricing, there are a selection of viable methods that you should implement to allow you to see the best prices available regardless of your location or the products which you have viewed in the past. These include everything from making your history private to avoiding shopping on certain websites.

• One of the major methods that many consumers use to avoid dynamic pricing is to change their IP address or block websites from accessing their location. Many businesses use location to predict your average household income, and this may mean that those who live in wealthier areas may see a drastic increase in the cost of the items available online. One options could be to give the website a postcode which you believe has a lower income level, or use a VPN which can hide the key information about your browsing location from the company in question.

• Although cookies will not naturally hinder your buying experience, third party cookies can damage your browsing time as these track your buying habits and allow businesses to see your most viewed products, products that you are interested in, and those that you are likely to buy. If you look at products multiple times, this can increase their demand and lead to higher prices. Then, disabling cookies stops businesses from tracking you when you are online.

• Dynamic pricing can be easy to spot if you are aware of the signs, such as prices exponentially increasing over a matter of days. If this is the case, you should avoid using this company and choose one which does not appear to use dynamic pricing. You can find the best company for pricing and your product by using price comparison websites which can compare not only the price but the qualities and benefits of your chosen item.

• Another good way to avoid dynamic pricing is to use a different device such as another computer, a phone, or a tablet to make your purchase once you have found the right product for you. You can also use different tabs to buy products which will allow you to buy products regardless of the inherent demand of the product. A more extensive version of this is choosing to use different browsers entirely to make purchases, such as switching from Internet Explorer to Firefox when you come to make a final purchase and move to the checkout process. It is also important that you take the necessary steps to clear your browser history and bookmarks through opening up the options tab on your browser.

• Additionally, signing into your account on websites which have loyalty schemes can also affect the pricing of products as this allows businesses to connect your browsing history with the same person and determine more accurate results in terms of the products that you are likely to buy. Not only this, but businesses are also able to determine how much you spend on products, and they can suggest similar products which is likely to make you spend more on the same purchase. Looking like a first time customer may also benefit you as companies are more likely to lure you in to a purchase with offers of better deals and prices to make sure that you consider investing in their services.

• Similar to downloading a VPN, you should also consider browsing in incognito or private mode which will allow your individual preferences to become disconnected from you as a user, meaning that you will be able to avoid price discrimination and see prices that have not been influenced by other factors, such as your location or history.

When you are considering shopping online, it is important to establish methods to avoid many of the internet’s major pitfalls as well as how to take advantage of its benefits. Price discrimination can impact the amount of money that a product costs, which can seriously damage your finances, especially if you often buy more expensive products such as flights and gadgets, which are more likely to be impacted by dynamic pricing. Whether you decide to change your browser or disable cookies, however, there is an extensive range of different methods and resources that you can use to reduce the extent of the dynamic pricing which you are a victim of online.

What Is Price Discrimination, and How Does It Work?

Price discrimination is a pricing strategy that involves charging different prices for the same product or service to different groups of customers. The goal of price discrimination is to maximise revenue by charging each group the highest price they are willing to pay, based on their willingness to pay, their location, or other factors.

There are several types of price discrimination, including:

1. First-degree price discrimination: This is also known as perfect price discrimination, and it involves charging each customer their maximum willingness to pay. This type of price discrimination is difficult to implement in practice because it requires perfect information about each customer's willingness to pay.

2. Second-degree price discrimination: This involves charging different prices based on the quantity of the product or service purchased. For example, a bulk discount for buying more units of a product.

3. Third-degree price discrimination: This involves charging different prices to different customer groups based on characteristics such as age, income, location, or other demographics. For example, charging higher prices for luxury products in wealthy areas.

Price discrimination can be used to increase revenue, but it can also be controversial. Critics argue that it can be unfair to charge different prices to different groups of customers, particularly if it is based on factors such as income or race. However, proponents argue that price discrimination can help businesses to maximise profits and provide more affordable products or services to lower-income customers.

PRICE DISCRIMINATION & ONLINE RETAILERS

Online retailers can use a variety of techniques to apply price discrimination and charge different prices to different customers. Here are a few examples:

1. Dynamic pricing: This is a technique that involves changing the price of a product in real-time based on factors such as demand, competition, and customer behaviour. Retailers can use algorithms and machine learning to analyse data and adjust prices accordingly.

2. Personalised pricing: This involves using data about a customer's browsing and purchase history to offer personalised prices. For example, a retailer might offer a discount on a product that a customer has viewed multiple times but hasn't purchased.

3. Location-based pricing: Retailers can use a customer's location to offer different prices. For example, a retailer might offer a discount to customers in a specific geographic area to attract more business.

4. Time-based pricing: This involves changing the price of a product based on the time of day or day of the week. For example, a retailer might offer a discount during off-peak hours to encourage more sales.

5. Discount codes and coupons: Retailers can offer discounts to specific customers or groups of customers by providing them with unique discount codes or coupons. These codes can be distributed via email, social media, or other channels.

Retailers with the right technology can apply these techniques to charge different prices to different customers and maximise their profits. However, it's important to note that price discrimination can be controversial and is not be appropriate for all businesses or industries.

how about Geographical Pricing?

Geographical pricing is a pricing strategy that involves charging different prices for products or services in different geographic regions or markets. The goal of geographical pricing is to reflect differences in demand, competition, and costs across different regions, and to maximise revenue in each market.

Geographical pricing can take many different forms, including:

1. Zone pricing: This involves dividing a country or region into different zones and charging different prices for each zone. For example, a retailer might charge higher prices in urban areas with higher demand and lower prices in rural areas with less demand.

2. Regional pricing: This involves setting different prices for products or services in different regions based on factors such as competition, consumer preferences, and economic conditions. For example, a company might charge higher prices in regions with higher incomes or more affluent consumers.

3. Export pricing: This involves setting different prices for products or services in different countries based on factors such as exchange rates, tariffs, and shipping costs. For example, a company might charge different prices for a product in the United States and Europe based on differences in costs and competition.

Geographical pricing can be an effective strategy for maximising revenue and profits, but it requires careful analysis of market conditions and costs in each region. Here is an example of how geographical pricing might work:

A company that sells smartphones might charge higher prices for its products in urban areas with high demand and lower prices in rural areas with less demand. The company might use data on population density, income levels, and competition to determine the optimal prices for each region. In addition, the company might use different marketing and advertising strategies in each region to appeal to different consumer segments. By using geographical pricing, the company can maximise revenue and profits by charging the highest price that each market will bear.

Price discrimination can be seen as wrong or unfair for a few reasons:

1. It can be discriminatory: Price discrimination can be based on factors such as a customer's income, race, or location, which can be seen as discriminatory or unfair. For example, charging higher prices to low-income customers can be seen as exploiting their financial vulnerability.

2. It can create resentment: Customers who feel that they are being charged higher prices than others can feel resentful and may be less likely to do business with the company in the future.

3. It can undermine trust: Price discrimination can undermine the trust that customers have in a company. Customers may feel that they are not being treated fairly and may question the company's values and ethics.

4. It can be illegal: In some cases, price discrimination can be illegal under antitrust laws or consumer protection laws. For example, it is illegal to engage in price discrimination that harms competition or that discriminates against certain groups of customers based on protected characteristics such as race, gender, or religion.

However, it's important to note that price discrimination is not always illegal or unethical. Some forms of price discrimination can be beneficial for both businesses and consumers, such as offering discounts to students or senior citizens. In addition, price discrimination can be an effective way for businesses to maximise revenue and profits, which can lead to greater innovation and investment in new products and services.