A recent article in The Sydney Morning Herald discussed dynamic pricing and it’s increased use in online shopping. The article, titled “Dynamic Pricing in Online Shopping Surging with E-commerce Boom” shares some unfortunate stories of consumers, in which brands utilize dynamic pricing to give the appearance that the customer is getting a great deal when in reality, they may not be.

Dynamic pricing is the practice of changing prices in real time in response to supply and demand. Think about the airline or hospitality industry that may change prices based on time, day, scarcity and more.

Another example is large e-tailers like Amazon designing algorithms that monitor what you buy, when you buy it, and the shipping methods you select in order to predict what the consumer is likely to pay for that item.

Companies do run some risks, however:

According to Mauricio Escobar, the global head of marketing at eDigital Agency, dynamic pricing does not fit all companies, nor is it in the interest of all consumers.

“Dynamic pricing allows companies to be price competitive using the efficiencies of online research to automate pricing changes “on the fly”…this means they reduce the risk of missing a sale,” he said.

“Companies only take a big risk if they set different pricing for exactly the same product; [one for] a customer who lives in Sydney’s eastern suburbs and [another for] someone who lives in Cairns. They might determine that the person from Sydney is more likely to pay a higher price because of her location and income bracket.”

The article goes on to list some pretty disheartening scenarios of unhappy customers.But what do you think? Dynamic or targeted pricing – good idea or bad idea?

But what do you think? Dynamic or targeted pricing – good idea or bad idea? Who wins, the consumer or the corporation? Sound off in the comments below!

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