AI Summary
5 min readPricing has gone high tech, and according to economist Lindsay Owens, that means companies are now running experiments on shoppers that would be unthinkable in a physical store. Her organization exposed a massive test by Instacart that charged some customers up to 23% more than others for the exact same groceries picked up at the exact same time and location. The AI platform Instacart used, called Eversight, bragged that a key feature was that customers would never know the test was happening.
How personalized pricing works
The most aggressive form of this new pricing is called surveillance pricing or personalized pricing. It combines two things Americans hate: being spied on and being overcharged. Companies collect data on your browsing history, location, purchase history, and even what you hover over without clicking. They use that information to estimate how much you are willing to pay for a specific item at a specific moment. Owens points to a study showing Expedia charged people from the Bay Area more than people from middle America for the same Manhattan hotel room. The hotel didn't have a single price; the price was based on the company's estimate of your net worth derived from your location.
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What you'll learn
- 1 (00:00) **Introduction: The New Reality of Pricing** - Host Marielle Segarra introduces guest Lindsay Owens, author of *Gouged*, who explains that technology has fundamentally changed how retailers set prices, moving away from the standard cost-plus model.
- 2 (05:06) **What Shoppers Think is "Fair": Cost-Plus Pricing** - Owens explains that most Americans consider a fair price to be based on the cost of making an item plus a reasonable profit margin, and they get upset when pricing deviates from this.
- 3 (07:34) **The Core Problem: Personalized/Surveillance Pricing** - Owens identifies personalized pricing as the most egregious change, combining two things Americans hate: being spied on and being overcharged.
- 4 (09:05) **The Instacart Experiment: Proof of High-Tech Pricing** - Owens reveals that her organization exposed a massive experiment by Instacart, which used an AI platform to run AB tests on shoppers, charging different prices for the same items at the same time.
- 5 (12:02) **Tip #1: Stop Shopping While Signed In** - Owens' first piece of advice to avoid surveillance pricing is to stop using retailer apps and avoid shopping while logged into a website.
- 6 (13:28) **Tip #2: Redefine Comparison Shopping** - Owens advises turning the pricing experiments back on retailers by comparing prices across multiple devices, accounts, and locations at the same time.
- 7 (14:42) **Tip #3: Use a VPN and Clear Your Cache** - Owens explains how a VPN can mask your location and device information, allowing you to run your own pricing experiments by setting a different location.
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