Posts Tagged ‘dynamic pricing’

Are Mac users easy pickings?

July 19, 2012

Punch line: Online retailers are using sophisticated analytics and web tracking methods to tailor their offerings… and to get folks to pay higher prices.

To get  the lowest prices: (1) Use a PC (not  Mac or iPad), (20 don’t sign on from a ritzy location, (3) pass thru a price-shopping site on your way to the destination site, (4) ask to see items sorted by price — from low to high, (5) check out at least one cheap item — maybe even put in your cart — then delete it later

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Excerpted from WSJ

Retailers are becoming bigger users of so-called predictive analytics, crunching reams of data to guess the future shopping habits of customers.

The goal is to tailor offerings to people believed to have the highest “lifetime value” to the retailer.

Online, seemingly innocuous information is available to predict shoppers’ tastes and spending habits.

For example, The average household income for adult owners of Mac computers is $98,560, compared with $74,452 for a PC owner.

Drilling down, Orbitz  has found that people who use Apple spend as much as 30% more a night on hotels, so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see.

More specifically …

  • Mac users on average spend $20 to $30 more a night on hotels than their PC counterparts, a significant margin given the site’s average nightly hotel booking is around $100
  • Mac users are 40% more likely to book a four- or five-star hotel than PC users,
  • When Mac and PC users book the same hotel, Mac users tend to stay in more expensive rooms.

Other factors that have influence over results include

  • A user’s location (e.g. geo-targeting high wealth zip codes)
  • A shoppers history on the site (e.g. purchases at list price or at discounts).
  • The referring site (e.g. Kayak delivers price-sensitive shoppers to travel sites)takes those properties into account.

Caveat emptor !

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My computer’s algorithms tell me that you’re willing to pay higher prices …

July 18, 2012

I was interviewed by a reporter from the Economist a couple of week’s ago.

Though I served up some prime material (and some red meat), my quotes didn’t make the cut

Dear Ken:
Unfortunately I was not able to use the information you provided, as what we needed was specific confirmation of actual examples of dynamic/custom pricing. Thank you once again for your willingness to share your expertise

OK, enough whining … here’s the gist of The Economist’s article Personalizing online prices

(more…)

Wasn’t it cheaper to park here yesterday?

March 21, 2012

Punch line: Airlines have priced dynamically for years — raising or lowering prices depending on how fast a flight’s seats are selling.

Some sports teams have started charging different prices depending on the  day-of-week and and drawing power of the opposing team.

Coke was busted in some locales for electronically jacking up prices when dispensing machines were running low on inventory.

Now, some cities are using high tech meters to dynamically change parking prices.

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Excerpted from NYT: A Meter So Expensive, It Creates Parking Spots

As much as a third of the traffic in some areas has been attributed to drivers circling as they hunt for spaces … causing  lost time, polluted air and illegal parking.

In his 2005 book, “The High Cost of Free Parking”, Donald Shoup, a professor of urban planning at UCLA advocated dynamic pricing of metered parking spots — finding the lowest price a city can charge and still have one or two vacant spaces available on every block.

San Francisco is putting the theory to test.

San Fran is using new technology and the law of supply and demand, raising the price of parking on the city’s most crowded blocks and lowering it on its emptiest blocks.

San Francisco installed high tech parking sensors and new meters at roughly a quarter of its 26,800 metered spots to track when and where cars are parked.

And beginning last summer, the city began tweaking its prices up and down and shortening (or lengthening) time limits — trying to to leave each block with at least one available spot all the time.

Eventually, the metes may charge different prices at different times of the day.

“We only need a few people to see there is a price difference and choose to park in a different location to open up just a few spaces here and there.”

But raising prices is rarely popular … and the program was “complicated on the social equity level” since high parking prices can shut out poorer parkers. 

Thanks to JF for feeding the lead.

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