This week we were slightly wrong footed when one of our clients showed us an on-line price for a hotel that was different to the one we could access from our office. How this could be they said? We then talked about “Dynamic Pricing”.
If you have not heard about this before, Wikipedia defines Dynamic Pricing as “a pricing strategy in which businesses set flexible prices for products or services based on current market demands. Businesses are able to change prices based on algorithms that take into account competitor pricing, supply and demand, and other external factors in the market.”
In more basic terms, on-line retailers, hoteliers, airlines and holiday companies will change their prices offered on the web based on the information available to them at the time. This could mean that at the same time, two on-line users could be seeing different prices, for the same item. The prices offered can be based on a number of complicated factors including (but not limited to):
- The number of times you have visited previously
- The type of visitor you are (business or home user)
- The post code your business is in
- The operating system your computer is using
Companies do this to maximise the potential profit they can make from each on-line transaction. It’s not all bad, sometimes Dynamic Pricing will work in our favour, particularly when purchasing items that are in low demand.
So how to get the best possible price?
Shop with different browsers. Try it out, have a go at shopping for the same item using two different Web browsers (e.g. Internet Explorer / Firefox / Google Chrome) when shopping on the web. You might find a higher or lower price. You can also try setting your Web browser to “private” mode, so that cookies – bits of data sent to advertisers – aren’t shared with retailers. Then you can see what price the retailer is offering when it doesn’t know who the shopper is.
Shop around. Changing your settings to private might not work in your favour… If you frequently shop at Store A but you visit Store B’s website, and Store B knows you shop a lot at Store A, Store B might drop its prices just for you to entice you to come around Store B more often.
Don’t commit straight away. Leave your item in the shopping cart for a few days. If you do a fair amount of internet shopping, you may have noticed that some retailers, in an attempt to get you to come back, will lower the price if you go back to the shopping cart and check out.
Say something. If you buy a hotel room, or a holiday, or a flight or even a high price electronic item and realize two days later it’s now a lot cheaper from when you bought it, speak up. Some retailers have policies in which they’ll refund the extra money you spent if the exact item drops in price within a few days or weeks of your purchase. Those policies may be in place because there’s nothing stopping you from returning the item, getting your money back and then buying the merchandise again, but it’s mostly because annoyed customers don’t make happy future customers!
And that’s what we did. We worked with our client and the hotel company to get the best deal we could by talking to them. We rarely rely purely on an on-line purchase. We will search on-line, and also contact the hotel directly and attempt to either price match the deal or make sure the web price is as good as the hotel is offering via their sales office.
At the end of the day, dynamic pricing is likely to stay, and get more and more sophisticated. The time and effort you spend searching for the best price might not be worth it, but it’s always good to know you are in charge of the transaction and ultimately the retailers still want customers that are happy.