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Behavioral Pricing

When someone has to pay a higher price than others for the latest iPhone because they liked the Apple ad on Facebook or wrote on Twitter how great they thought the device was, this is called Behavioral Pricing

What is Behavioral Pricing?

Behavioral Pricing refers to the pricing of products or services based on individual consumer behavior, devices used or shopping habits. Every internet user leaves a trail. This data from demographic records, from web logs and loyalty programs and last but not least from social media profiles is collected and analyzed to calculate individual prices for each customer. A well-known example of this was the pricing of the first digital subscriptions to the New York Times. Blackberry users were charged $15 per month at the time, while iPad users had to pay $20 per month.

What are the advantages and disadvantages of Behavioral Pricing?

Charging every customer the perfect price is the height of commerce. Online retailers are in a unique situation to make this happen because of the abundant online consumer data. On the other hand, this pricing policy has come under early criticism and is frowned upon, especially by consumer and data protection advocates. Behavioral Pricing is a form of price discrimination. The goal of price discrimination is to maximize profits by adjusting the price different customers pay based on consumer data. Data protectionists see the pooling of consumer data from different sources as a significant breach of data protection legislation.

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