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Dynamic Pricing Can Increase Your Online Shopping Costs

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by , 08-11-2009 at 08:19 PM (2542 Views)
When Cookies Bite Back – Dynamic Pricing Can Increase Your Online Shopping Costs

I know most people are not techie geeks like me. They don’t want to get involved with the “guts” of their computers and the software that runs on them. However, if you do any shopping online, you need to know about cookies and how they can cost you money.

Cookies are tiny files, implanted into your computer by the websites you visit, that track your purchases, spending habits, and online movements. When a site recognizes you or shows you information tailored to your interests, it is using cookies. Most cookies are innocuous, used only by some marketing department to determine whether you were attracted to their advertising and how you used the site. However, in recent years retailers have gotten more sophisticated in their use of cookies and implemented something called “dynamic pricing.” This is where cookies can bite you back.

Dynamic pricing uses the cookies stored on your machine to determine which price or deal you will be offered at a retailer’s site. The retailer may determine that, because of past purchases, you are a big spender on their site and should be offered a discount. On the other hand, they may determine that you are likely to buy something from them, regardless of price, and try to stick you for a higher price. They may offer various prices because of where you live, how you choose to pay, what they think your income is, what you bought last time, how long an item has been in your cart, how many times you view an item, whether or not you’re known to use coupons, or how long it’s been since you shopped with them. Some sites (travel sites are among the worst) will show “specials” to some consumers but not to others. Some will show you the special initially but then, if you navigate away from the site and come back later, the special will be gone. It’s enough to make you want to cry, “Uncle.”

Dynamic pricing is perfectly legal and is simply a more sophisticated variant of what some brick and mortar stores have been doing for years by using promotions such as placing coupons in certain papers but not others, or offering deals to certain groups like seniors, students or credit card holders. Retailers insist that dynamic pricing almost always works in favor of the consumer, resulting in lower, not higher, prices. But an unscientific study on my own computers (shopping with a computer full of stored cookies and shopping on a computer where I cleared cookies from my browser after every site visit) showed that, in practice, I was offered a different price or offer about 50% of the time when I used the computer full of cookies, and about half of those offers were higher than the price shown to me on the clean computer.

Most people are unaware of the practice and do nothing to ensure they’re being offered the lowest price. They simply put the items in their cart and check out, assuming that everyone who shops that site on that day is being offered the same price. Not all online retailers engage in dynamic pricing, but the numbers of those that do are growing. It may not seem like a big deal to pay a little more than someone else, but it all adds up and if your purchases are expensive, that little bit can be a lot of money. So what can you do to make certain you’re getting the best price?

First of all, learn how to clear cookies (and also your browsing history) from your web browser. Each browser’s procedure is different, so consult the manufacturer’s help site or get a tech-savvy friend to show you how. When you’re shopping, try searching for the item before you clear your cookies and make a note of the price. Then clear your cookies and search again. If you get a different price, you’ve been dynamically priced. Simply logging out of a website isn’t enough. Your history with that site is still on the machine, ready to be retrieved even if you’re not shopping under your username. You need to delete the pesky cookie files.

Second, try shopping on different computers and/or with different web browsers, if possible. Each browser and operating system handles cookies differently, so changing machines or browsers may change the offers you get. Retailers “optimize” their sites for use with certain browsers, so if you use an alternate browser you may defeat some of their tracking capabilities. If you don’t have multiple machines at home, try using a machine at work (if allowed), or use a friend’s machine. If a site is dynamically pricing, using alternate machines or browsers will usually reveal it.

Third, don’t leave items in your shopping cart to buy later. This seems to be the single biggest trigger for retailers to kick in dynamic pricing. In my own little study and in talking with others, prices seem to increase most often on items left in carts. My own theory is that the retailer figures that, if you left it there, you’re going to buy it regardless of the price so they try to get away with jacking it up a bit. I also think they’re hoping you won’t remember the original price, so they increase it knowing you’ll probably just check out without thinking twice. If you see an item and are convinced the price is the best you’ll get, go ahead and buy it. Otherwise, exit the site without putting the item in your cart or clear your cookies before you go back to purchase the item.

Fourth, vary your movements to see if prices are affected. Try searching several competing sites at the same time to see if you get better offers. Some sites seem to be able to note that you’ve shopped a competitor’s site for the same item and adjust the price downward. Also try visiting the site in different ways. Type the URL directly into your browser and see what you’re offered. Then try entering the site from a search engine link or a link from a rewards site or online ad. Sometimes how you are directed to the site affects the prices a site will offer.

Fifth, know the retailer’s policies on price adjustments. Some retailers will refund the difference if the same item appears at a lower price on their site or a competitor’s site within a set number of days. If this is the case, keep an eye on your item after you’ve bought it and see if you get offered a lower price. If so, copy/print the appropriate page(s) for evidence and ask the retailer to refund the difference.

Retailers are becoming more sophisticated at separating you from your money. That means that you must become more sophisticated in order to play their games and get the best prices. I know most people aren’t interested in how computers work, only that they do. But when your computer is being used against you, you can’t afford to remain in the dark about how your online movements are tracked and used for profiling. You need to know how your computer works, how to rid it of the cookies that are tracking you, and how to beat the retailers at their own game.

-Author: J. Derrick

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  1. frugal-fannie's Avatar
    Thanks Carol very informative.