Lindsay Owens, who runs the consumer advocacy group Groundwork Collaborative and wrote Gouged: The End of a Fair Price — And What That Means for Your Wallet, argues that corporations are experimenting on customers to determine how much each individual will pay.
“What we’re seeing is Big Tech reinventing the rip-off,” Owens says. “These are old tricks, but they’ve been supercharged by new technologies.”
Personalized Pricing Is the Worst Kind
According to Owens, the worst method is personalized pricing, which involves retailers gathering data such as browsing history, demographics, and purchase history to determine how much you will pay.
Retailers “collect data on you to better ascertain how much they can charge you,” she says. Algorithms run pricing experiments on consumers, testing what your pain point is. “Will she buy it at $5? $7? $12?”
Pricing decisions can turn on that data, with fewer discounts or higher prices being the outcome.
Don’t Shop Through Retailer Apps
Certain stores give shoppers rewards and reduced prices when they buy through an app or a website, according to Owens. Yet he argues that those benefits fall short of justifying the effort.
“When you’re signed in, you’re giving those companies a lot of information about yourself,” she says. That includes your location and purchase history. They even know what you click on and don’t buy.
Owens says they may also conduct experiments on you. “What your pain point is,” “Will she buy it at $5? $7? $12?”
The data you’re putting forward carries significant risk, since it could be used against you in pricing decisions, leading to fewer discounts or higher prices.
Comparison Shopping Gets Harder
Checking prices used to involve comparing costs across several retailers. Today, comparison shopping also involves checking those prices across multiple devices.
Before buying anything, Owens says it pays to compare prices on several devices.
- While logged in
- While logged out
- With incognito mode
- With a virtual private network (VPN)
Another approach is to get your friends to verify costs on their own devices. You could examine the price of a sweater on the brand’s clothing store at the mall, the brand’s website yourself, then request that a friend confirm what it costs on their phone.
Clear Cookies and Limit App Permissions
Companies collect data while you browse online. “If you can clear that data before you make a purchase, then that data isn’t available to the company to use against you,” Owens says.
Owens poses two questions about app permissions. He wonders whether your apps truly need to track your location, and he asks if you can disable the feature that lets one app share data with another app. You can walk through your devices and tighten the controls over what apps are allowed to do.
It pays to consider a virtual private network, or VPN, as a way to mask where you live, since that detail might cost you more. With a VPN, you can carry out your own price tests by changing your location, for instance between the San Francisco Bay Area and Nashville, Tenn. “See if you can get a more competitive price coming from a different space,”
Shop In Person When You Can
When buying things, look for small stores run by local families instead of big chains. For services, go back to older ways of getting them done. Take a taxi rather than booking a ride through an app. Phone your neighborhood restaurant, place your order, and pick it up yourself instead of having it delivered.
These small businesses may be more expensive and less convenient, but they are less likely to run “super sophisticated, algorithmic, price-fixing experiments on you,” Owens says.
But a lot of these technologies are seeping into brick-and-mortar stores. Electronic shelf labels are popping up at big-box retailers and grocery stores. These labels allow retailers to change a product’s price at any time, leading to “more price variation throughout the grocery store,” Owens says.
Some retailers are also removing price tags altogether. “Without a posted price, it creates a lot of uncertainty for people on a budget,” she says.
Maryland Bans Personalized Pricing
If you’re frustrated by all these schemes, there’s good news. Some states are beginning to ban personalized pricing.
A new law banning personalized or dynamic pricing at grocery stores and third-party delivery services in Maryland goes into effect on October 1. Other states are weighing similar prohibitions.
The Four Ways to Protect Yourself
A pricing expert lists four strategies for keeping from getting ripped off.
- Avoid shopping through retailer apps
- Learn the new way to comparison shop
- Make it harder for companies to track your data
- Shop in person when you can
States are starting to act, and consumers have tools at hand.
Source material: “4 ways to avoid getting ripped off, according to a pricing expert,” NPR.
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