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Unfair Prices? Just Blame it on Your Data

Posted by PriceBeam on June 29, 2017

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With the rapid advancement in data science and pricing analytics, it's no longer a question of how to personalize prices for different buyers based on their willingness to pay: the only barrier is the unfairness perception that arises, which will make your customers hate your guts. However, a recent study by Forrester Consulting shows that 78% of UK consumers think science-based pricing is fair: as long as the price is determined by a computer, there are no hard feelings.

Granted, this is not the same as saying that 78% of consumers will be fine with price discrimination as long as it's based on data and performed by a computer, but it is interesting to see how accustomed consumers have become to advanced technology, and almost accept that businesses apply algorithms that are much smarter than the customer. At the same time, the majority of the respondents indicated that they would find such pricing unfair if it was executed by an individual (e.g. the store manager) rather than a computer. In this case, it's no longer just an objective, data-based assessment -- it's personal! The store manager has screened the customer and made his own decision; and that's frowned upon.

There are several reasons for why you should use data to set your prices -- it's far more accurate, gives you higher profits, and keeps your firm sustainable. And now, it seems that your customers will be much more understanding if your pricing decisions are based on data rather than your personal judgment and gutfeel.

Source: http://www.fierceretail.com/technology/78-consumers-okay-data-determining-pricing

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Written by PriceBeam

PriceBeam
PriceBeam posts regular guides, articles and news related to pricing and strategy. Go have a look!