Why you and your neighbour might pay a different price online

Once upon a time, buying a plane ticket was simple. No matter when you bought it, the price from Toronto to Vancouver on a given airline was always the same. Now, prices can vary widely from day to day.

But it’s not just plane tickets anymore: online retailers are frequently changing their prices, and not only by the day. According to experts, prices might change by the hour, or because of what the competition is doing, or even based on who is visiting the website.

As online retail gets more sophisticated, retailers are starting to use information about their customers to vary the price, deals and products you see while visiting a site. It’s called dynamic or targeted pricing and according to one academic, it’s common now and will soon be everywhere.

“I believe it is widely practiced,”  “Companies don’t brag about it of course. They practice it but they don’t often want to talk about it.” The researchers recruited 300 real-world users and got them to test various e-commerce sites. Then, they tried to figure out what was causing any differences they saw.

“The exact behaviour varies from site to site,”. “For example, several of the travel sites gave deals if you were either logged in or you went from a mobile device, like your phone or your tablet, you would get around $10 off per night for a hotel or for a rental car.”

Shoppers looking at the same website from their desktop computer at home did not get the same discount.

A lots of information is instantly available to retailers when you visit a website, like whether you’re using a Mac or a PC, if you’re on a mobile phone and which browser you’re using. Your IP address, a unique string of numbers that identifies computers connected to the internet, can help a website guess at your postal code and real-life location with “pretty good” precision.

Someone from a wealthier neighbourhood might be quoted a higher price than someone from a poor one. And it doesn’t take a ton of personal information for a website to guess at some of your characteristics.

Take a postal code, for example. That doesn’t tell a seller exact details about who you are but it helps them guess what kind of lifestyle you lead by using things like the average income in the area.

But the information-gathering doesn’t end there, “As you continue to browse the site, they’re tracking everything you click on. So again, this sparks a lot to develop things like an interest profile. What kind of things do you like? And potentially your price sensitivity: are you clicking on the cheap stuff, are you clicking on the expensive stuff? If it’s a site that you’ve been to before, it can immediately remember things like the things you’ve browsed, clicked on and purchased in the past.”