Corporations Learned the Maximum Amount They Can Charge for a Product
bloomberg.com
bloomberg.com
All these techniques, from gamification to behavioral mining, were developed in isolation - when only one actor maximized their profits.
Their results apply when most other actors don't pursue the same goals.
Once everyone starts to do it, I predict none will work and will be counterproductive on a larger scale.
A bit of a tragedy of commons.
If they don't do it but their competitors do, they will lose
But if all of them do it they will all lose in the end
It's not really what I would call a good outcome
It’s like, “today you won’t guess what I’ll be building” yes, I can, you just showed me twice.
that type of action does not scale
what will happen instead is that people will develop an immunity to these types of thumbnails and you will visit less - behaviors are the main driving mechanisms
it will be boring like exaggerated burlesque facial expressions in the early movies
https://addons.mozilla.org/en-US/firefox/addon/clickbait-rem...
https://chromewebstore.google.com/detail/clickbait-remover-f...
When the gatcha concept is new, everyone is on board and seems like a golden goose, but who will do it again and again?
a generational amnesia is still 20 years ...
The methods described might be new, but the underlying principle is simple and fundamental - charge customers based on their willingness-to-pay. If customers are willing to pay $10 for your product, as opposed to $20, almost all businesses would take that into account when setting their prices.
In a low-tech world, you can only price stuff using one-size-fits-all. So you would price stuff based on something like median-willingness-to-pay. This puts your product out-of-reach for half its potential customers, while giving a big discount to the other half. The techniques described in the article are designed to "fix" the above - sell the product to as many people as possible, and give everyone a more even discount compared to their willingness-to-pay.
There is no reason for this strategy to stop working just because other companies are also doing it. In fact, it will only snowball once this practice becomes more commonly accepted.
In a macro sense, fine-grain-price-differentiation is undoubtedly in the best interests of all corporations. Whether they are in the best interests of consumers is more debatable. I'm guessing the answer is no. In theory, the best possible outcome is perfect price differentiation, coupled with increased corporate tax rates (or capital gains tax rates) that are used to lower income tax rates. I doubt this will happen anytime soon.
If everyone does it, it's a de facto cartel.
Cartels generally end when one of the members breaks ranks and starts selling the product for less than the agreed-upon cartel price and vacuuming up all the customers. The result is often a price war.
Trust works only when most actors are trustworthy.
Once you know the prices are jacked up just for "you", and once you know you are being "played," you behave differently and resist.
That is the point I am making, true value + gamification = price, but the gamification part is the quickest to do away with.
This isn't true. If you find out that only Tesla is customizing their car-price for you personally, you may decide to boycott Tesla. But what are you going to do if every single car company does the same thing? Boycott all cars and take the bus? Hence my point that price-personalization works even better when more companies do it, not less.
Edit: Okay here's an example:
https://www.imercer.com/articleinsights/2024-first-quarter-u...
Note that they talk about it being a "merit raise", but that's sort of double talk. It's the budget for raises that aren't tied to a promotion. So the pool amount is 3.5%-ish, and you get some leeway to personalize it a bit..some people get 0%, some 2%, some 5%, etc. But it's just a COLA in disguise where most people get just under the pool percentage. Meaning most people get 2.5-3% or so.
Mercer gets their data from roughly 500 companies of varying sizes.
And, yes, I'm sure there are some places that don't give any sort of annual COLA type raises at all.
That's not what I've heard but then again n=1. No inflation correction because [insert snarky comment about c-suite compensation].
And data to back this up? Does not match my personal experience at all.
It seems like something the public will push for if companies overplay their hands and start doing this too aggressively.
The principle that poor people are the majority and prefer to pay less for things.
The principle that it's better for consumers and producers to engage in trade than to force a business to be unviable.
Price discrimination doesn't guarantee cheaper products for poor people. E.g. the same shampoo when labeled for women here costs more. Or say Netflix costs less in some regions that are considered poor, but the rich people there still pay the lesser price.
If a business is only viable by extracting the most from every individual instead of finding a fair price, is it really better for society that business exists?
What a about the principle of fairness and people being treated equally?
Life is not fair from the moment of conception choosing which parents and location you are born to.
> If a business is only viable by extracting the most from every individual instead of finding a fair price, is it really better for society that business exists?
A buyer buying for the lowest price they can and the seller selling for the highest price they can is the definition of a fair price. Since supply and demand curves are constantly in flux, the fair price is also constantly in flux. Hence the practice of haggling with every vendor in old school markets/bazaars, even for daily vegetables.
Hmmm... is it really the "same" shampoo? In my experience, products aimed at women typically have fancier packaging, added scent, and often exotic ingredients (which may or may not have any actual effect).
All of those things cost more money.
It's like the argument about laundering and pressing women's blouses costing more than men's dress shirts.
Men's shirts are more or less standardized, and can be processed using semi-automated equipment, while women's blouses often have lace, ruffles, or other decoration, large fancy buttons, unusual cuts, etc. and have to be pressed by hand.
Markets work better the more customer knows about a product and the company that provides it.
Markets work worse when the company knows more about the customer and the product than the customer that buys it.
It's basically extension of market for lemons.
It’s not an easy question.
I think alternative to making it illegal could be demanding full disclosure to eliminate information disparity. If a company does it, it should make it clear that it does it, and disclose the price range and criteria to determine your price (the latter can be obfuscated by AI-washing though). It looks like in the EU the requirement to disclose the fact of using personalised pricing alone (without further detail) discourages most of retailers from using it.
At some point you gotta accept that this is dystopia.
(yeah, this line of thinking isn't going to go anywhere good)
It's often the case that overall prices fall. For example, by keeping prices similar to what airline tickets used to cost for business customers, airlines can reduce the price to others and increase the number of flights, increase efficiency, and provide a better level of service.
Companies have always tried to maximize their revenue. It might be faster now but the process is no different than your local supermarket messing with the price of toilet paper every few weeks.
The innovation in that cheap capital has rolled up industries. It’s easy to keep meat prices high when 3 companies control 80% of volume. In past times, you have dozens or hundreds of suppliers who controlled little regional niche markets.
If I were to develop a retail product, when it came time to put a price on the package, you can be sure that I would collect data to see how much people were willing to pay for the product. That’s hardly “stop-the-presses!” headline news.
I know this article is about price discrimination or market segmentation, but those topics aren’t secrets either ( https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-... ).