How Web Sites Vary Prices Based on Your Information (and What You Can Do About It)

It's likely no surprise that online retailers can change prices depending on your location, browser history, and operating system. But what's really going on here? Let's take a look at the tactics retailers use to dish out different prices to you, and how you can check to see if it's happening to you.

Prices change all the time in brick and mortar stores based on location, but when you're shopping online it's assumed that everyone's getting the same deal. That's not always the case, and as it turns out, certain retailers change the price based on location with "dynamic pricing."

How Web Sites Vary Prices

As early as 2000, Amazon tested dynamic pricing on DVDs by offering at least three different prices to different customers (one example was the Complete Second Season of the X-Files at: $89.99, $97.49, and 104.99). Amazon got some flack for the choice, and quickly dropped the practice.

Then, in 2005, dynamic pricing surfaced again. In this case, a study from the University of Pennsylvania revealed that about 70 percent of people had no idea a retailer could change prices based on their spending habits, and pointed out a few key examples. These included a camera retailer who offered different prices based on whether a shopper had visited a price-comparison site, and a computer manufacturer who offered different prices to different government entities.

Back in 2010, Slate spoke with a few of the programmers behind dynamic pricing to see just how far spread the situation was:

One computer scientist who builds smart sites for online retailers?with a nondisclosure agreement, hence the anonymity?says that concerns about different customers getting different price quotes for the same good are probably overblown. Some retailers do it, particularly when gauging the market for certain items... major retailers are getting much more sophisticated and subtle about ways to game their shoppers. It's common for big retail web sites to direct different users to different deals, offers, or items based on their purchase histories or cookies... And companies frequently offer special deals for customers with a few items in their shopping bags-from discounts on additional items, to free shipping, to coupons for future purchases. Ingenuity, rather than price-tampering, is now the name of the game.

As it turns out, the phenomenon is still going, and according to The Wall Street Journal, it's just as widespread as it used to be:

The Journal identified several companies, including Staples, Discover Financial Services, Rosetta Stone Inc.and Home Depot Inc., that were consistently adjusting prices and displaying different product offers based on a range of characteristics that could be discovered about the user. Office Depot, for example, told the Journal that it uses "customers' browsing history and geolocation" to vary the offers and products it displays to a visitor to its site.

The reasoning for this price discrimination is pretty simple: one person's willingness to pay top dollar might mean someone else will pay less. In this case, online retailers were altering prices based on zip codes. This has nothing to do with shipping cost?it has to do with the average income in that zip code. Live in an area with a higher average income? You might see higher prices at online retailers.

It's not just zip codes and browser history. The operating system you use plays a role too. The Wall Street Journal points out that some retailers show discounts if you're using their mobile app (or browsing from their mobile site). Others, like the travel site Orbitz, have been accused of charging more to people who shop from a Mac because Mac users have a higher average household income.

How to Check If Prices Change for You and Make Sure You Get the Best Deal

So, what can you actually do about this? You have a few different options, but none of them are particularly simple.

Change Your IP Address (or Enter in Different Zip Codes)

Retailers can tell where you are through two distinct methods: you tell them where you are (with a zip code) or they get it from your IP address. If you live in zip code that typically has a higher income level, try entering in a nearby zip code where you know the income level is lower.

As for your IP address, you can obscure that by setting up either a proxy server or VPN. Changing your IP address doesn't guarantee you'll end up with a better deal, but you'll at least know if the sites you frequent are changing the price on you.

Browse In Incognito/Private Mode or Disable Third-Party Cookies

One of the ways retailers track your spending habits is through browser cookies. If you want to disable this, you need to either shop in your browser's incognito or private mode, or block third party cookies. NBC Bay Area also suggests using one browser for shopping and the other for purchasing if you're especially worried about dynamic pricing altering your deals.

Check Mobile Prices Before You Buy

Many sites, at least Orbitz and Rosetta Stone, offer different prices depending on whether you're browsing from mobile, Windows, or a Mac. In this case, you need to either check the prices on an alternate device (if you have one), or change your user agent.

You can change your user agent in any browser (see our guide for the full details). When you change your user agent you can trick a web page into thinking you're on a different device or operating system. This means you can check and see if you can get a better deal by pretending you're ordering from a Windows PC or a mobile phone. At least in the case of Orbitz, you might find a cheaper deal on hotels from a mobile site.

Check Other Retailers and Take the Best Deal

This is a bit obvious, but if you think you're getting swindled by a web site using dynamic pricing to charge you more, than your best resort is to simply shop elsewhere. We've walked you through the process of getting the best deals online before, but in this case it's all about cross-referencing deals.

In this instance, you can use a browser extension like Invisible Hand to alert you when products are cheaper elsewhere (including flights and hotels). The fact is, even if one retailer is using dynamic pricing to alter how you pay, others probably aren't, so a quick search on Google Shopping should find you a better deal. Otherwise, you can check deal sites (like any of these) to find discounts and cheap deals.

Dynamic pricing for online shopping is still a relatively new thing, and it's not necessarily bad. If you don't live in an high income zip code or state, you're at the best end of this deal, but otherwise you might want to make an effort to really hunt down better prices.

Source: http://feeds.gawker.com/~r/lifehacker/full/~3/IjEy0mvCypU/how-web-sites-vary-prices-based-on-your-information-and-what-you-can-do-about-it

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