If you think getting the best price on an airline ticket or hotel room is as simple as searching a few websites such as Expedia or Priceline, think again. Thanks to the power of big data, e-commerce sites are able to harness what they know about you to present you with prices that are customized to you.
The result? You could be paying more for the same product than your neighbor down the street.
Price discrimination, in which a product's price is customized to the user, and price steering, in which the order of search results is customized to the user, are two ways in which companies fiddle with pricing. A new study by researchers at Northeastern University examined 16 e-commerce websites and found that price discrimination and steering is especially prevalent on travel websites.
“Overall, we find numerous instances of price steering and discrimination on a variety of top e-commerce sites,” the authors wrote. The travel sites in the study, which included CheapTickets, Expedia, Hotels.com, Orbitz and Priceline, showed price inconsistencies in a higher percentage of cases.
Here's what they found:
- Cheaptickets and Orbitz offered lower prices on hotels to site "members."
- Expedia and Hotels.com steered certain users to more expensive hotels.
- Travelocity personalized its search results for users searching on a mobile device.
- Priceline personalized search results based on a user's history of clicks and purchases.
These practices aren't illegal and, in some cases, price discrimination can benefit consumers -- such as when you're offered a coupon for being a loyal customer or a senior discount. But assistant professor Christo Wilson, who was a co-author of the study, says that things get dicey when retailers aren't up front about their policies.
"I get this question from people all the time: ‘How do I get the best price?’" Wilson said. "The truth is I don’t have a good answer. It changes depending on the site, and the algorithms they use change regularly. Good advice today might not be good advice tomorrow. The point is that as a consumer, you’re at a disadvantage unless it’s transparent."
Travel expert Christopher Elliott says that beating the algorithms can be a complicated game. "The sites know more about you, whether you've logged in, when you like to fly," he said. "So they'll show me a fare that's a little bit higher. If you can limit what they know, you might be able to find a better deal."
It can be difficult to stay one step ahead of these travel sites, but based on the study's findings, below are some suggestions regarding how you can get a fuller price picture.
Clear Your Cookies
Most of the information that e-commerce sites collect on you is from "cookies" -- small digital files sent by your browser to each site you visit, relaying information about your online behavior history. So it might help to delete these files from your browser's settings before you search.
Then again, because some of these sites actually offer preferred pricing to certain customers based on what they know about you, deleting cookies might actually hurt you. Some search engines allow you to surf the Web without saving cookies, so try this option instead to compare the prices that the website offers when it knows who you are vs. when it doesn't. You can open a “private” window on Firefox, an “incognito” window on Chrome or turn on “private browsing” in Safari.
Try Multiple Browsers Or Devices
Travelocity users got different prices when shopping on a mobile device, and consumer expert Andrea Woroch says that even different IP addresses can turn up different prices. So before making a big purchase, surf on your home computer as well as your work machine, and check prices on your tablet and mobile phone as well.
Check Member vs. Nonmember Pricing
Because some sites gave lower prices to members, be sure to compare pricing for when you're logged in and when you're not.