As the saying goes, “The only constant in life is change.” This is true in what is known as dynamic pricing, the practice of charging different consumers varying prices for the same item.
Dynamic pricing is a way for companies to get the highest price for a product by allowing the price to change within in a specific period, either a few hours or a day, while staying within the maximum amount they think - by virtue of your online history - you would be willing to pay. The highest price you are willing to pay is what economists call the reservation price.
Here’s an example of how it works:
The base price of the item is $25. However, the seller knows you might be willing to pay up to $4 more according to your buying habits. Using dynamic pricing, the seller adjusts the price you see to no more than $29.
You are likely to encounter dynamic pricing when you purchase an airline ticket or rent a car online. At certain times on certain days, airlines will charge a different price for the same flight. Sometimes using a different browser will affect your pricing results. If you allow cookies, those little file snippets that sites download to your computer to ‘enhance’ your shopping experience, your chances of encountering dynamic pricing are increased.
Is it legal? Yes, as long as the seller does not discriminate based on race, gender, location or age.
To get the best price, try the following tips:
- Shop around.
- Compare prices on different days and times.
- Use different search engines.
- Remove the cookies on your computer browser.
- Shop from multiple IP addresses/different computers.
- Look for the BBB seal on the company’s web site. Be sure it is authentic and links to their BBB review. If there is no seal, check them out on www.bbb.org.