What if when you bought a new Macbook, the price was higher because your tweets constantly referenced your love and devotion for Apple? What if Orbitz used the fact that your Facebook ...
Likes include “Party Rocking in Miami” to charge you more for a flight to Miami?
This is called online behavioral pricing. It’s a consumer’s worst nightmare as it uses the traces of your online identity to maximize prices on the products and services you want most. It’s also an ecommerce merchant’s dream.
Behavioral pricing is a form of price discrimination. The goal of price discrimination is to maximize profits by adjusting the price that different customers pay based on data about the consumer. Price discrimination is common offline, such as the Museum of Modern Art charging adults $25 but students only $14.
We’ve already seen online merchants make preliminary attempts at this. When the New York Times unveiled its digital subscriptions, it decided to charge $15 per month to subscribe on your clunky old Blackberry, but $20 per month to subscribe on your iPad. Yet, it doesn’t cost the New York Times more to deliver content to the iPad.
Instead the assumption was that you, the owner of a $500 tablet, would be more willing to pay than your average smartphone user.
But this rudimentary price discrimination is a mere hint of what’s coming with behavioral pricing…