It would be unthinkable for a high-street shop to offer the same goods at different prices to different consumers. But this practice is fairly common online, as a growing number of retailers start implementing what is known as price discrimination. It means that single pricing as we know it is a thing of the past.
“It’s long-standing economic theory, which shows companies can make a lot of money from charging more from people who are prepared to pay more,” explains Catherine Waddams, professor of economic regulation at Norwich Business School.
Businesses have been accumulating a lot of data about online consumers and can use targeted advertising, surge pricing and clever algorithms to manipulate pricing based on preferences and habits of shoppers. It can be subtle: travel search engines offer higher prices after repeated search, knowing that savvy travellers won't want to miss the best deals. It can be blatant, as well: Uber will make use of surge pricing when demand soars and they know that stranded passengers will pay the higher fare.
Price discrimination is not necessarily bad news, though. “If companies can charge more to people who will pay and less to people who won’t, as long as it doesn't impact their cost of production, then they may start supplying more people,” says Professor Waddams. “It’s not equal, but it’s not all bad.”
It is possible to sidestep these price hikes and come out on top, but only if you know what to look out for. Here are Moneywise’s top tips:
1. Get off Google
2. When possible, switch off your cookies
3. Search for deals on your mobile as well as on a laptop or PC
Lots of companies are trying to increase their share of the mobile retail market and offer deals when you shop through your mobile. Many companies also offer special discount codes if you download and shop through their own apps, so it’s worth keeping an eye out for these offers, even if you later delete the app.
4. Use multiple browsers
Every time you search for a deal online you leave a trail with your browser. The shorter this trail, the less likely that you will be subjected to a price hike when you are finally ready to make a purchase. By using more than one browser to search for, compare and then eventually purchase items, you can minimise the trail you leave behind, and will be less likely to be tracked or targeted.
5. Block all trackers
Every site on the internet is embedded with tracking cookies (which are different from your browser cookies). These trackers are behind most of the targeted advertising that follows you from page to page. Try downloading anti-tracker plugins which will block these tracking cookies and prevent ad analytics from creating an ad map of where you like to navigate online. The Electronic Frontier Foundation’s Privacy Badger (Eff.org/privacybadger) is good, but Ghostery (Ghostery.com) or Disconnect (Disconnect.me) work too.
6. Don’t automatically accept ‘surge charges’
Most of us know to expect to pay higher prices when travelling at peak times - this is called dynamic pricing. “It’s responsive to the amount of supply and demand in the market,” explains Professor Waddams. “Whoever you are in that particular moment, you will get the same price.”
Apps such as Uber are now deciding the value of this surge in demand in real time, often asking users to accept fares many times higher. To avoid surge charges, try to travel outside peak times whenever possible. As for the apps, the key is to remember that you don’t have to use that service. If Uber prices are surging, it might be cheaper to call your local minicab company.
7. Know when to shop
Increasingly, online retailers are using dynamic pricing by increasing prices at times when online traffic surges. There is a lot of research based on the rich data that online retailers have which can help us figure out when traffic is lowest and the ideal times of day to shop.
The consensus appears to be that Monday is the best day to purchase big ticket items, such as electronics, according to How to Win at Shopping by David Zyla and Eila Mell; while Tuesday afternoons are ideal for booking flights, according to Skyscanner.
Generally try to avoid online shopping during weekends, and try to buy tickets for travel at least seven weeks before you intend to get away.
8. The Amazon Factor
Amazon’s tactics for constantly changing prices based on what the competition is charging, your browsing history and peak browsing hours are well documented, even if the company refuses to confirm them. But now websites like UK.CamelCamelCamel.com and Idealo.co.uk allow you to track prices over time, and even create ‘Amazon price drop alerts’. When buying bigger items, it will often pay to be a little patient, track the prices and then strike when the price is right.