Stop being easy bait, become smarter online shoppers

Buy your plane tickets on Tuesdays at 3 P.M. Wednesdays are also good. But whatever you do, never buy on Friday, Saturday, or Sunday. That would just be stupid.

According to FareCompare.com, airlines usually file their airfare sales on Monday nights. Competitors scramble Tuesday mornings to match the lowered prices, and the sale prices are jerked offline by Thursday night. “A ticket can be $199 certain days and $499 other days even months ahead of time,” the Wall Street Journal reported earlier this year. When all is said and done, the average airline ticket is cheapest at 3 P.M. EST on Tuesdays.

Airline tickets, rental cars, and hotel rooms are standard examples of goods subject to dynamic pricing that changes over time. Even if we’re not privy to the hour-by-hour fluctuations of airfares, most college students know they change faster than stock prices, and the process of snatching a cheap flight often feels like an online game of Whac-A-Mole.

But what most college students don’t know is that dynamic pricing exists elsewhere on the Internet. DVDs, shoes, clothing, textbooks — many of the goods we buy online — are wrapped in a dynamic pricing algorithm designed to squeeze those last few dollars out of your debit card.

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Online retailers use your browser cookies or history of past purchases to calculate what you may be willing to pay for their products. The more you buy, the more information they amass, and they will often sell these digital dossiers to other vendors. Modern E-Commerce sites are like a digitized bazaar where the merchant sizes you up before offering the highest price he thinks he can get from you. But the customers don’t know they’re bartering, and the merchant is concurrently bartering with thousands of unknowing people.

For instance, members of 2007 Consumer Reports investigation found that a pair of boots left in an online shopping cart at Zappos.com increased in price by $3.95 when they returned to buy them four days later. In the same investigation, Barnes and Noble sold “a hard cover book for $20.80 on a Wednesday [that] suddenly rose to $26.00 on Friday.”

Amazon pioneered the practice back in 2001. It used “a plethora of information gathered from customers, ranging from where they live to what they buy to how much they have spent on past purchases,” wrote the authors of Online Dynamic Pricing, a study on E-Commerce from the Virginia Journal of Law and Technology Association.

Almost every online purchase requires you to enter a mailing address, which retailers use to estimate your socioeconomic status. My second purchase might be more expensive if I ship my first purchase to Beacon Hill than if I sent it to, say, Dorchester. Last November, a consumer protection blog even caught Capitol One offering Chrome users better online car loan rates than it did to Firefox users.

Sixty-four percent of American adults did not know it is legal for a retailer to charge two different people different prices at the same time, according to the Annenberg Public Policy Center. But it is quite legal. And quite common.

Some economists argue that dynamic pricing is nothing more than the latest innovation for companies trying to maximize their revenue streams. Business owners want to sell their goods at the maximum price consumers are willing to pay for them, and they have always known that this willingness varies between individuals.

These algorithms try to capture those small losses between a standardized price and the price an individual is willing to pay. The practice may be specious insofar as it leads consumers to believe they are being offered the same price as everyone else, but in the world of economics, it increases market efficiency.

Consumers, however, are not without recourse. As Annie Lowrey writes in Slate, “consumers actually do hold the upper hand online.” There are innumerable price-comparison sites online, as well as “shopping bots” that will email you whenever prices on a specific item drop. Try out a browser plug-in called “The Invisible Hand,” which notifies you when lower prices are available on other sites for the product you’re currently viewing. Make use of these. And if you really want to ensure you’re getting the best price, run the same searches on multiple browsers, and remember to delete your cookies. If retailers can game the system, so can we.