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Customized Pricing – Not Always Cheaper

07/02/2012

Most consumers want the best deal when shopping online. Often times getting a better deal is the primary motivator for online shopping.

So how would you feel if you learned that some sites charge more if you are on a Mac versus a PC? Unfairly charged? Thought so.

Price customization software allows retailers to take data from online-data-aggregation firms, compare it to their shopper demographics and customized prices to reflect individual customers tendencies to purchase.

At travel site Orbitz, according to a recent article in the Wall Street Journal, Mac owners are deemed to be willing to spend more on hotels than PC users. In-house research findings suggest that people who use Mac computers spend as much as 30% more a night on hotels and are 40% more likely to book a four or five-star hotel than PC users. In response to this buying activity, Orbitz is pushing “customized” search results to Mac users that prioritize more expensive options; the site believes they are taking steps to better match the predicted preferences of their consumers.

Is this fair? As long as the same room at the same hotel property on the same dates are priced identically, the concept of customized pricing is fair. After all isn’t customization a motivator for online shopping? Why wade through dozens of Motel 6 offerings when you really want a high-end property?

Be certain that Orbitz is not alone in customized pricing. The number of price customization software solutions is increasing as are the retailers deploying the tactic. Firms like Facebook and Google see value in the rich data they are collecting on everyday users of their product. Collate data from Facebook, line it up with your own customer data, mix it with pricing software – and you’re on your way to increasing margin dollars with minimal investment.

Invariably a retailer will stumble in this process causing embarrassment to itself by charging two prices for the same product. It will happen. And when it does, well, consumers will not like it.

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