Dynamic pricing: Should you pay more than others?

It is a fallacy that the prices of goods and services on the Internet are transparent and comparable. Rather, the opposite is the case. Online providers often change their prices every minute. Not only the time of day and the season play a role, but also the place of residence and whether the search query comes from the latest iPhone or an old Android mobile phone. The technical term for this is “dynamic pricing”. If you don’t want to have the prices adjusted to you, you can cheat the system.

What is dynamic pricing?

Dynamic pricing is a strategy that online businesses use to adjust prices on short notice. Sometimes one also talks about surge pricing or simply dynamic prices. We are familiar with dynamic price adjustments primarily from the travel industry. Prices for hotels, rental cars or flights vary depending on the time of day, the season and sometimes the length of personal research. But there may also be short-term price changes in online mail order. This is based on sophisticated algorithms that calculate the displayed prices based on data from competitors, the supply and demand ratio and individual customer data.

Experts identify four types of dynamic pricing:

Time-based pricing: Faster services, more service. This also plays a role in pricing. But it can also make a difference whether you shop at the weekend or on a weekday.

Exogenous market conditions: The most important reaction here is to market developments. When commodity prices rise, new competitors enter the scene, or demand soars, the price of a product or service also adjusts.

Top prices: This primarily refers to seasonal prices. Anyone who can only travel during the school holidays can sing a song about it.

Segmented Pricing: Prices change depending on the customer. Customers with more purchasing power see a higher price. It doesn’t matter if you have an account with the dealer or not. The data you send to the site when you search for a query reveals enough about you.

We understand that dealers and service providers adjust their prices to the market. No one should be left with higher costs for raw materials. But what about the different prices per customer? How does the retailer or comparison platform even know how much I’m willing to pay?

What data is transmitted with search queries?

With each “normal” search request via the browser, a large amount of data is transmitted and stored.

Websites detect whether you have an iPhone

For example, the page you access may recognize the device you are making the request from. The site can recognize whether you surf via smartphone, tablet or PC, and whether the device is brand new or slightly older. This is technically possible.

IP address provides location information

Your personal IP address is also transmitted with each search query. An IP address is something like a virtual postal address. There is only one of each and it shows roughly where you are.

Cookies save search queries

In addition, the systems recognize whether you have been looking for a specific product or service for a longer time or more intensively. The answer to this is offers that are optimally adapted to you. Unfortunately, not only in relation to the product, but also the price.

What do you think: Who will be shown the higher price for a leisure hotel on the Côte d’Azur? The person from the Munich area making the search query from a new Apple computer or the person from a village in Mecklenburg-Western Pomerania using a 100 euro mobile phone?

Avoid dynamic pricing

You can at least partially prevent or bypass the dynamic price adjustment. You will not be able to avoid having to pay higher prices for a holiday during the summer holidays. But you can prevent merchants and platforms from reading your data.

Here’s what you can do:

  • Use different browsers: Sometimes we want the benefits of saved search histories because they show us more relevant results. It is, for example, very practical when the system recognizes that we do not want to order a pizza from the restaurant around the corner when we search for “Rimini”, but are planning a trip there and are therefore looking for hotel offers. But if you want a little more anonymity, just use a different browser.
  • Use incognito mode: For even more anonymity, use incognito mode to not save cookies. This is called something different in each browser. Firefox “private window”, Chrome “incognito window” and Edge “inprivate window”.
  • Use a different device: Just try it – you have nothing to lose if you make the same request on different devices.
  • Using a VPN: This is the ultimate solution. Because a VPN (virtual private network) not only hides your IP address and encrypts all data in such a way that you can no longer read websites. With a VPN, you can also change your virtual location at will. For example from Starnberg to Bottrop or vice versa.

Avoid dynamic pricing with a VPN

A VPN is the easiest and most secure way to avoid dynamic pricing. At least as far as the personal version is concerned. There are several free VPNs for the browser. But they have to make money somehow. This is why some of the free VPN providers sell user data. We recommend a cheap VPN subscription from one of the big and well-known providers. Your data is safe and you can protect multiple devices at the same time with just one subscription and at least book flights cheaper with VPN. But you can also book rental cars and hotels cheaper with VPN.

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