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Welcome To Pricing Hell

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Welcome To Pricing Hell

The ubiquitous rise of add-on fees and personalized pricing has turned buying stuff into a game you can’t win.

The Atlantic,

5 min read
3 take-aways
Audio & text

What's inside?

As AI technology and Big Data become ubiquitous, so does data-driven personalized pricing. Learn why consumers and economists are so split on this controversial practice. 

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Editorial Rating

9

Qualities

  • Controversial
  • Analytical
  • Hot Topic

Recommendation

Imagine trying to book a plane to go to an important event, such as a funeral, only to see that airline prices have skyrocketed. As companies gain more access to your data, you may find they charge you more when an algorithm determines your need for a product or service is higher. Christopher Beam, a writing fellow at The Atlantic, does an illuminating deep dive into the dynamic pricing “hell” that he sees emerging, pushing consumers, companies and economists to reflect on whether such practices are actually fair.

Summary

As data-driven personalized pricing grows ubiquitous, consumers are speaking out. 

The controversial practice of “dynamic pricing” — raising prices based on real-time factors such as a surge in demand — is ubiquitous today, and consumers are getting fed up. In fact, when the fast-food company Wendy’s announced that it might shift to a dynamic pricing model in 2025, this triggered a massive backlash from the media, the public and competitors. For example Burger King took the opportunity to differentiate themselves from Wendy’s, announcing: “We don’t believe in charging people more when they’re hungry.” However, brands are leveraging dynamic pricing, ranging from Amazon to airlines, while doing so in increasingly complex, individualized ways, using consumer data to personalize fees.

Personalized pricing is taboo, yet becoming more widely practiced. For example, an exposé in 2015 revealed that The Princeton Review increased prices for students living in zip codes with a higher demographic of Asian residents. One of the main ways brands can access personal data — which they analyze to determine your “willingness...

About the Author

Christopher Beam is a New York-based writing fellow at The Atlantic.

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