The pitfalls of online pricing
I was feeling a little guilty this week. While on Amazon the other day, several albums popped up as “recommended for you,” based on my previous browsing. I wasn’t really looking to buy, but many of the titles I wanted were available for same-day delivery.
What a world we live in! I ordered a couple records, and that evening I was cranking Metallica on vinyl.
I felt like I got good deals on the records; and the nearly instant delivery was super-cool.
It also wasn’t very smart shopping, which explains my guilt.
In my three years writing the Grows on Trees column, I’ve written several times about being a smart consumer, which includes resisting impulse buys. Just being aware of the temptation has helped me get better about this for the most part.
But, it turns out, same-day delivery was too much for me to resist.
Manipulated by pricing
I also noticed something about those albums: They’d all vacillated in price during the previous few weeks. What’s up?
According to an article in The Atlantic — How Online Shopping Makes Suckers of Us All by Jerry Useem — online prices can shift minute to minute.
You’ve probably noticed that. Companies have so much data at their disposal — culled from our many hours (and years) spent online — that they’ve figured out how to extract the highest possible prices for products we're willing to pay. There’s really no such thing as a “list price” or standard price anymore for anything.
For instance, prices tend to be higher during the business day, when lots of people are shopping online at work. They drop in the evenings. And sites like Amazon don’t just manage the prices of items. They manage our perception of the prices of items. So that feeling I had of getting a good deal on those records — that was by design.
You can see this price game in the grocery store, too. Standard items like eggs and milk stay fairly steady because consumers tend to remember those prices and compare them store to store. But many other products can vary wildly in price, depending on the season, the location in the store, and what other stores are doing.
What can we do about all this? In a way, the best advice is nothing new: Be diligent. Do your research. That’s always been a part of being a smart consumer. It’s important to be diligent about the smaller items, too.
The Useem article refers to a TV that Amazon slashed by $100 on black Friday last year — but also jacked up the prices on the HDMI cables needed to connect the TV (by about 60 percent). Companies know consumers watch the prices of large items very closely, but often will buy smaller things on impulse.
Ah, those impulse buys. Funny thing — the same day I bought those records, I got a notice that my 13-year-old son had bought $20 worth of “gold” for a game on his phone.
When I confronted him about this, he was nonplussed with my concern. He’d received a gift card, and he made his own impulse buy. It was his money, and that was how he chose to spend it.
A treat now and then
I’ve written 36 Grows on Trees columns, and I’ve coauthored a book for kids on money smarts. In both spaces, I've repeatedly discussed the value of being deliberate about purchases.
Diligence alone can be a lot of work, of course, even without the added stress of thinking about how we’re constantly manipulated into spending more of our money. (Don’t get me started on the stress about all the data we’re giving up through our devices.)
But there’s another thing I often write about: We all deserve a treat every now and then.
Yes, save as much as you can. Yes, do your research before you buy. And yes, avoid impulse buys.
But sometimes, I think it’s OK to buy something you really want, like a record or an in-app purchase — or to make a snap decision to get malts with your kids, even though you hadn’t planned to spend that money.
If it truly is an every-once-in-a-while thing, we don’t have to feel guilty.
Eric Braun is a Minneapolis dad of two boys and the co-author of The Survival Guide for Money Smarts: Earn, Save, Spend, Give for young readers. Send comments or questions to firstname.lastname@example.org.