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Comment by nabla9 | Hacker News Reader

Perfect customer retention is not their goal. If selling 100 for $70 gives $7000 in revenue and selling 70 for $100 gives $7000 in revenue and the inverse relationship is linear, they should sell 85 for $85 and get $7225 in revenue.

They have created solid economies of scale that others can't match. Together with the massive amount of customer data they are in a position where they can optimize their prices and respond and react in almost real time to get optimal customer retention.

The long term goal is dynamic pricing for the perfect price discrimination (personal pricing). Detect when the customer is tired or stressed and show higher prices. Detect price conscious customers and show them lower prices. Maybe Alexa can trained detect the mood from the tone of voice and exploit that.

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So essentially price gouging. What a great business model.

Optimizing revenue given a particular supply and demand isn't price gouging. People are paying for the convenience of buying anything they want with two clicks from their computer chair, turns out that's pretty valuable.

That isn't what the parent said:

> Detect when the customer is tired or stressed and show higher prices. Detect price conscious customers and show them lower prices.

Has nothing to do with supply and demand.

Behavioral economics would like to disagree. Supply and demand are a function of what buyers want; somebody wanting something _right now_ has been a force that markets cater to since markets have existed.

Behavioral economics isn't a law of physics, much of it is completely unproven, relying on psychology, which has a huge reproduce-ability problem.

Price gouging is raising prices to greater than what is fair for the value.

The amount of price raised is almost certainly to be greater than what is deemed fair in these cases from the law of supply and demand. Despite one person demanding it more, one person may be demanding it less, who is "more price conscious." Demand doesn't change in that scenario.'

It's one thing to cater to someone coming in, looking in a rush, verses spying on them in their own home and offering them products. If this is the world we're going to, I can only hope I'm not in it.

> The amount of price raised is almost certainly to be greater than what is deemed fair in these cases from the law of supply and demand.

That's not true. Price gouging is a term thrown around a lot, but generally it refers to drastically increasing prices when supply takes a sudden hit (due to natural disaster, often).

> verses spying on them in their own home and offering them products.

Spying on them? Are you joking? They are on Amazons website. How in the world is that spying? Man, more and more Hacker News is starting to sound like reddit.

It has to do with demand.

If it is that granular it can't have any impact on demand.

While one person might be moody and more like to demand said product, another could be more rational and need more incentives to buy said product - hence nothing actually changes, and the mean is what will be used.

The impact on demand at that given time will need to be compared to the value. Trust me, it won't be equivalent.

> The long term goal is dynamic pricing for the perfect price discrimination (personal pricing). Detect when the customer is tired or stressed and show higher prices. Detect price conscious customers and show them lower prices. Maybe Alexa can trained detect the mood from the tone of voice and exploit that.

Now that's some baseless speculation if I've ever seen any. People aren't stupid. They start noticing that prices are cheaper at Walmart, they'll go back to shopping at Walmart.

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