How retailers use 'dynamic pricing' to get you to pay more
While shopping online is easy and fun, the shopping algorithms online retailers use can actually get you to pay more.
Shopping online is convenient, easy and fun. But as with all good things, there's dark side to the world of online commerce. Whether you know it or not, your favorite sites are probably using pricing algorithms that change the cost of an item based on things like your browser history and your location.
This is called dynamic pricing, and it's pretty much a given in today's online marketplace. Basically, it means that retailers can charge you more for an item than they're charging someone else, based on where you are, what you've been looking at online, and even what kind of device you're using to shop.
For example, let's say you're interested in buying Beyonce tickets. You head over to Ticketmaster, check out the price, and decide to think about it for a few minutes. But when you come back to make the purchase, the cost has gone up! Why? Because that website has been tracking your browsing history, and it knows that this is isn't your first time looking at those tickets. You clearly wanted them enough to come back for them, so chances are you'll be willing to pay a bit more to secure your spot at the concert.
You might notice that airlines do this kind of thing all the time, but this is isn't the only kind of dynamic pricing around. Many retailers will charge more or less depending on your location, so if your zip code has a relatively high median income, you might be charged more than someone who lives in a less affluent part of town. Even the device or OS you're browsing from can affect the price you see on certain items. Some retailers will charge mobile customers less than desktop browsers, and still others target Mac users with higher prices, as the high price of Apple products means that on average, Mac users tend to have higher incomes.
Retailers are making bank off these shady tactics, which means they're likely here to stay. But that doesn't mean you have to fall victim to them every time you shop online! There are ways to beat the system and ensure you get the lowest possible price, every time. How? Here are eight of our favorite ways to avoid dynamic pricing schemes.
A 2015 study by The Brookings Institute found that people who comparison shopped online for insurance rates were more likely to get a better deal than those who didn't, and this trend holds across many different kinds of products. This happens because retail sites track your browsing history, and when they "see" you looking at a competing site, they'll automatically lower their prices to to try and keep you as a customer. Dynamic pricing aside, comparison shopping is ALWAYS a good idea when you're shopping online. We've written before about why you should always price check before buying anything on Amazon (which is, by the way, very liberal in its use of dynamic pricing schemes), so we recommend erring on the side of financial caution and double checking before making any kind of online purchase.
Enter another zip code.
If you live or work in a neighborhood with a high average income, try entering a different zip code at checkout and see if the price drops. If it does, you know you're dealing with dynamic pricing, and you can act accordingly, and...
Disable your location.
If changing up zip codes affects the price of your items and you don't want to risk this every time you shop, you might want to disable your browser from being able to track your location altogether to avoid being served up higher prices than you would be given elsewhere.
If you're using Chrome, go to your settings, then click on Privacy > Content Settings > Location, and select "Do not allow any site to track your physical location," from the list of options. This should prevent stores from being able to see where in the world you are, so they won't be able to target you to pay more if you're shopping from an affluent area.
Use different browsers and devices.
As we mentioned before, a lot of companies base their pricing on what kind of device you're browsing from. In many cases, using a mobile device can help you pay less. According to a Wall Street Journal investigation, browsing travel sites like Orbitz and CheapTickets from an iPhone or an Android phone can net you up to 50 percent off the desktop list price, and in many cases, retailers will offer extra discounts and coupons to customers who download and shop from their apps.
Another way to snoop around for better prices on the same site is to utilize a few different browsers and buy from the one that shows you the lowest cost. As retail sites sometimes use your browsing history against you, using a browser that you rarely touch as a price check mechanism can save you some cash in the long run. For example, if you're seeing a high price on your Chrome browser, fire up Firefox, Internet Explorer or Safari and see whether one of those browsers nets you a lower lower price. If you have access to more than one computer, you can try doing the same thing on each computer to see what you can find.
Clear your cache and disable third-party cookies.
Retailers track your browsing history using things called cookies, which are small bits of text that are stored in your browser every time you visit a site. Third-party cookies are the kind used to track your browsing activity from site to site, so if you disable them, retailers won't be able to see what sites you've been on, or whether you've looked at this particular item multiple times in the past. Here's a good breakdown of how to disable third-party cookies on different web browsers. Once you've done this, make sure to clear your cache and your browsing history so any cookies stored before you disabled them will be cleared out as well.
Browse in Incognito mode.
The incognito browser isn't just for teenage boys anymore -- using incognito or private mode on your web browser stops that browser from both collecting cookies and saving your history after you close the window, so if you don't want to totally disable third party cookies or constantly clear your browsing history, this is a good way around that. I realize I might be in the minority on this issue, but I sometimes like having third-party cookies enabled because it allows advertisers to more accurately target me. I've found some really cute dresses through ads on my Facebook feed, but I definitely don't like the idea of paying more for things based on my browsing history, so I can have my cake and eat it too by using a private browser to price check when online shopping.
Sign up for Paribus.
This is a tool I actively use that's saved me about $4 on Amazon purchases in the past two months alone. What Paribus does is track your email for receipts, and then price checks those against what the retailer you bought from is currently charging for that same product. When the price has recently gone down, Paribus automatically contacts the retailer with a price adjustment claim, and the retailer then refunds you the difference.
It's a super easy and hassle-free way to make sure you're getting the items you've already bought for the best price available, and it literally takes less than a minute to set up.
Shop on Brad's Deals.
Don't want to worry about whether the price you're seeing is the best deal you could be getting? That's where we come in! Every single deal on our site is guaranteed to be the lowest price for that item anywhere on the internet. No matter where you live, no matter what device you're shopping from or what your browsing history looks like, you can shop Brad's Deals sales knowing that the price you're getting is the best around.
This article first appeared in Brad's Deals.