‘Personalized pricing’ means the price isn’t the same for everyone

The article notes that when Uber introduced “surge pricing,” charging more during peak times, it was met with opposition and some uneasiness on the part of consumers. But Uber pointed out that airlines do the same thing, and have for years.

But now marketers have taken the concept to another level. The price may vary, not because of when you are buying, but based on who you are. If the data about you suggests you are able to pay more, it’s likely you’ll be charged more.

The concept is called “personalized pricing” and corporate America is beginning to adopt it. It’s the same as when a handyman gives you a quote for doing a household job. He might look at your car, your house, your haircut and the way you’re dressed to determine what you might be willing and able to pay.

A consumer revolt?

Consumers may believe the price is the price, no matter who you are. PA Consulting’s consumer pricing expert Michael Thompson says price discrimination was previously used mostly in big-ticket transactions, such as buying a car. He notes that colleges offer different aid packages to different students, based on what they can pay. He says expanding price discrimination to hundreds of small transactions risks a consumer revolt.

Michael adds: “That’s the lesson from Wendy’s recent interest in, and retreat from dynamic pricing. Consumers value transparency and consistency in pricing. For those reasons, in most categories, personalized pricing is picking up pennies in front of a freight train – not worth the risk."