Big data may lead to differential pricing

There are many values ​​for differential pricing to overcome fixed costs. For example, if rural doctors make differential pricing, rural doctors can make a profit, that is, they charge some consumers more than other consumers. As a result, one often sees economists favoring differential pricing more than non-economists, who consider this unfair. According to different pricing organizations, different pricing is divided into one, two, three different pricing. Differentiated pricing in accordance with a consumer's individual willingness to pay for each consumer charges different; two differential pricing does not follow the individual characteristics of consumers to charge, but in accordance with the purchase of goods; three differential pricing will be classified consumers , In accordance with the willingness of different groups to pay.

By historical trajectory, most of the textbooks focus on two and three differential pricing to explain, a differential pricing is considered not feasible, in addition to fair norms and possible arbitrage behavior, leading to this infeasible part of the reason is that information Limitations: It is difficult to obtain enough information about the willingness to pay for consumption. However, growing technology is making PRVs more prevalent, especially to provide consumers with feedback cards for groceries that offer special discounts to different consumers. Benjamin Shiller investigated the Netflix consumer's message for the range of profitable uses of one-level differential pricing.

In his report, he said that this approach was used to assess the effectiveness of different set-up variables when estimating the likelihood of consumers subscribing to Netflix services. In the absence of any information, each consumer may have the same subscription rate of about 16%. In the probabilistic model, including standard demographic data slightly improved expectations, such as popularity, age, income, children, and population density. Consumers may have subscriptions between 6% and 30%. With all the variables added, it is expected that the possible subscriptions will be close to zero to 91%, such as variable factors such as web browsing history.

After much research, Benjamin Shiller found that the more information available, the more profit from the differential pricing of one level. As big data and online shopping increase the amount of information that business attaches to individuals, the benefits and profitability of one-level differential pricing will become more and more difficult to withstand. In addition, Shearer found that web browsing data makes companies prefer to use a differential pricing.

Shearer's report said that if Netflix uses one-level differential pricing, some consumers spend twice as much as others. His research paper conclusions and common sense suggest that the advantages of one-level differential pricing will grow as the business gets more and more optimized data. Relative to simple demographics based on differential pricing, knowing how people browse information on the Internet can increase profits by more than 1% is a great help in understanding how people are shopping in the real world.

Is the world so weird and unfair? Shearer believes this is a fact, and he suspects most people think it is a fact.

As a result, in a sense, primary differential pricing will be extremely shocking in the future and will reach every corner of life. The economist Tyler Cowen's new book, "Average Is Over," will be on sale on Sept. 12. It could spark more controversy. The content may surprise some readers, which shows that if Cowen's opinion is correct, the era of differential pricing will usher in a big change.