Uber Normalized Dynamic Pricing—and Now It's Coming for Your Wages
The End of a Fair Price: Dynamic Pricing and the Normalization of Gouging
Lindsay Owens's new book Gouged exposes how personalized pricing and algorithmic collusion have replaced fair prices. From RealPage's rent-fixing software to Uber's upfront pricing that cut driver pay, Owens shows that price tags are disappearing—and consumers are losing. She proposes a Shoppers' Bill of Rights to ban surveillance pricing and algorithmic wage discrimination.
Uber's greatest innovation wasn't 'disrupting' the taxi industry—it was socializing and normalizing the very idea of dynamic pricing. They made us comfortable with the notion that prices could change at any moment.
- sib
"Did you know that home insurers use aerial drones to study your rooftop? If the conditions signal neglect, they might cancel your coverage before an accident."
While there are certainly some issues of concern in the article and the reviewed book, the above seems like exactly what insurance companies should be doing: pricing (or making available) coverage based upon risk.
This is not much different from an auto insurance company raising your rates (or cancelling coverage) because you've received a number of speeding tickets, which implies increased future risk of loss.
In fact, I received a letter from my homeowners insurance company a couple years ago stating that they would not renew our coverage due to conditions that they'd observed (clearly from aerial imagery) including overgrown bushes touching the walls of the house and some larger tree branches growing over the house.
I had a landscaping company come and fix the issues, sent my own drone up to take new pictures, sent the company the pictures, and they agreed to continue coverage. And now my house has less future risk of damage. This seems like a win-win for both of us.
- Paedor
My issue with dynamic pricing boils down to price discovery and information asymmetry.
When I buy something, I really don't know what it's supposed to cost. Barring atypical levels of research, I know how much it's worth to me, and how much it usually costs, and that's it.
But my supermarket knows almost exactly how much eggs are worth to me. If it can show me, and everyone else, a different price at different times of day, I'm no longer confident in my ability to "bargain" effectively with the supermarket. So while I can see some strong economic arguments for dynamic pricing, especially in cases like power or water usage where there's a very inflexible supply, I basically just don't trust that we won't get screwed.
Fixes could be possible. Maybe with a third party system for monitoring prices, quality, etc. But it's hard, and pretty obviously not solved in the current market, much less one with even more price complexity.
- xnx
Competition, and being willing to shop around is the only thing that has ever kept prices down.
- timoth3y
I have a a modest proposal. Any company wishing to use this kind of dynamic pricing should be willing to submit itself to "dynamic taxation".
Under dynamic taxation, we the public, would examine that firm's books at the end of the fiscal year and decide how much taxes they owe based on their ability to pay.
Note that companies are not natural people, they do not have a fundamental right to exist. Just like under dynamic pricing, if the shareholders and board think their dynamic taxes are too high, they are perfectly free to just dissolve the company and use their capital elsewhere.
- gumby
Of course in enterprise sales this has been the norm since forever, referred to as “value pricing”.
Back in the early days of laptops, I went to Oracle to give them a quote; while cooling my heels in the lobby I looked round, realized I was being an idiot, and so opened my laptop and increased the prices across the board.
- GuB-42
Price gouging and discounts are exactly the same thing, seen from a different angle. You can look at the people who pay more and complain, or you can look at the people who pay less and give praise.
It is kind of obvious, and supported by economists who are the experts in this field, but the article dismisses it as bullshit without much proof.
It says differential pricing benefits no consumer, and yet, I managed to travel for way bellow cost. If it wasn't for dynamic pricing, I wouldn't have travelled at all. Of course, some people were price gouged, someone has to actually pay for these costs, but these people could afford it, otherwise they wouldn't be in.
The article then mentions overall price increases. Well, yes, sometimes prices increase, for good or bad reasons. Maybe the costs have increases, because there is a war somewhere or something, and the company has no choice but to increase the price to stay in business. Or maybe the company finds itself in a monopoly position and just wants to make more profit. In any case, the price would have increased, dynamic or not. And the solution is not to ban dynamic pricing, it is to avoid getting into wars for the first one, and break down monopolies for the second.
There is also the question of spying on people, but if you don't want spying on people, ban spying on people, dynamic pricing or not. You don't need to spy on people to do dynamic pricing, and many businesses who don't do dynamic pricing spy on their users.
Uber is g […]
- bix6
At 176 pages I may read it but also I’m already so exhausted by this topic since nothing is changing.
- giantg2
I'm just waiting for the class action suits when dynamic pricing is shown to disproportionately affect protected groups.