https://prospect.org/economy/2024-06-04-one-person-one-price/
"Six years ago, I was at a conference at the University of Chicago, the
intellectual heart of corporate-friendly capitalism, when my eyes found the
cover of the
Chicago Booth Review, the business school’s flagship
publication. “Are You Ready for Personalized Pricing?” the headline asked. I
wasn’t, so I started reading.
The story looked at how online shopping, persistent data collection, and
machine-learning algorithms could combine to generate the stuff of economist
dreams: individual prices for each customer. It even recounted an experiment in
2015, where online employment website ZipRecruiter essentially outsourced its
pricing strategy to two U of Chicago economists, Sanjog Misra and Jean-Pierre
Dubé.
ZipRecruiter had previously charged businesses one fixed monthly price for its
job-screening services. Misra and Dubé took the information ZipRecruiter asked
prospective clients on an introductory registration screen about their
location, industry, and employee benefits. In the initial part of the
experiment, ZipRecruiter assigned a random price to each business. The
researchers could then see which attributes correlated with a willingness to
pay higher prices. “There were enough things that people involved had disclosed
at the registration stage that were associated with their price sensitivities
that we could build a pricing algorithm around it,” Dubé told me in an
interview.
Sure enough, when ZipRecruiter deployed the algorithm, to deliver tailored
prices based on the questions customers answered, profits went up 84 percent
over the old system. Misra became an adviser to ZipRecruiter. The algorithm
isn’t used today, but remnants of the pricing strategy remain: ZipRecruiter’s
FAQ page promises to “customize” what it charges based on particular
attributes.
Businesses have always wanted to maximize what they can induce people to pay,
trying to walk right up to the limit before a customer says no. But everyone
has a different pain point, and companies were deterred from purely
individualizing what they charge, because of publicly posted prices and
consumer anger over the unfairness of being charged differently for the same
product.
Today, the fine-graining of data and the isolation of consumers has changed the
game. The old idiom is that every man has his price. But that’s literally true
now, much more than you know, and it’s certainly the plan for the future."
Via
The RISKS Digest Volume 34 Issue 29:
http://catless.ncl.ac.uk/Risks/34/29#subj8
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
