Loser or winner in the face of price fluctuations?

The wage stagnationrecord inflation, decline in household consumption are now redistributing the cards of our consumer society to a immense extent. The strategy used by online shopping sites can particularly amplify these phenomena. This is called lively online pricing. This is a strategy of constantly fluctuating prices up and down, which more and more sites are using for different product or service categories.

For example, this method was used by the Ticketmaster website to distribute tickets Bruce Springsteen is performing on his 2023 tour, which saw prices on top seats rise to $5,000, leading fans to revolt.

Our job tests in particular, they encourage us to consider the consequences that lively pricing on the Internet might have on consumer purchases. How does it work? When does it benefit them and when does it harm their purchases? What options do they have to limit it?

How it’s working ?

Active online pricing is mainly based on the utilize of artificial intelligence algorithms used to orchestrate price fluctuations of the same product or service over time. This strategy uses, among other things, consumer data (such as the eminent cookies collected on the Internet or information voluntarily provided during online registration on a website, such as name or age) and market data (such as prices charged by competitors). This method of pricing allows, for example, sales sites for price change information in real time, like Amazon, Cdiscount or Fnac.

Algorithmic pricing automation may even become the basis of some companies’ business model. For example, for Uber appthe price is set instantly, depending on supply and demand, based on, among other things, computer-aided travel planning at the customer’s request and the number of drivers available at a given time in a given geographic area.

The primary goal of a company using lively pricing policy is to maximize profit. The latter is even more optimized when this method is based on personalizing the price for each consumer. In this case, the algorithm used mobilizes, among others “willingness to pay” (corresponding to the maximum amount he is willing to pay for the product), a criterion resulting from an algorithmic calculation that takes into account, for example, his purchase history.

Consumer, winner or loser?

In the context of lively pricing on the Internet, we can legitimately ask to what extent constant price fluctuations for an identical product make the consumer feel like a winner or a loser…

There are two extreme forms of lively pricing policy. The first is the basic form, in which the price of the offered product or service changes over time in the same way for all consumers. The second form is completely personalized, which means that each consumer is charged a different price based on an algorithmic estimate of their value. “willingness to pay”. In the latter case, consumers are offered different prices for identical goods at the same time. The assessment of willingness to pay may not reflect the economic and social reality of individuals. The algorithm may therefore lead to an overestimation of this parameter, which may be perceived by individuals as unfair and therefore make them feel like losers.

In general, regardless of the approach used in lively online pricing, when the price is perceived as high, the consumer perceives themselves as a loser, similar to the reactions of fans who were unable to afford tickets to one of the band’s concerts Bruce Springsteen. One sec when he pays a price he considers lowthe consumer will be the winner.

What can a consumer do?

Price tracking tools are being developed to lend a hand consumers find the history of prices on some platforms, such as Amazon, in order to decide whether they should buy now or risk waiting. You can also find sites that guide consumers in buying specific products, when lively pricing is common on the Internet in some areas, such as concert tickets.

Consumers can also try to limit the data that sites can collect when possible by not allowing it collection of cookies when they visit the site. They can also avoid providing all the required information when filling out the registration form. You can also make some purchases during the off-season to ensure low demand for products, such as buying an umbrella or a grill in the winter.

Of course, lively pricing also raises the issue of corporate responsibility. The latter must question the limitations of the different algorithms they can utilize to integrate consumer concerns. For example, the challenge for sites is to find a way to minimize the biases associated with algorithms that can generate prices that lead to inflated values “willingness to pay” For each type of product or service there would therefore also be the issue of price fluctuation ranges and the frequency of price changes perceived as acceptable by potential buyers.

Moreover, some sites officially display the utilize of this strategy, such asUber while others, such asAmazonchoose not to share the secrets of the algorithm’s manufacturing processes. In an era where consumers are calling on companies to be more crystal clear, corporate ethics that allow individuals to feel less disadvantaged by better understanding the prices they are being offered when buying a product may ultimately prove imperative and strategically valuable.