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Dynamic pricing changes cost of online items

November 15, 2010 12:00:00 AM PST
Finding the lowest prices on the Internet may seem fairly simple, but even savvy shoppers who think they've landed a great deal may not be getting the best price after all.Dell sells computers, printers, smart phones and other electronic products. If you're shopping Dell online, there is one easy trick that could help you save hundreds of dollars at checkout, and it starts at the top of the homepage.

You have a choice of clicking on products for home, small and medium businesses, the public sector, which includes teachers, or for a large enterprise.

Depending on which tab you click, it could make a huge difference in the price.

For example, take a 65-inch Mitsubishi Home Cinema TV.

The cost for teachers is $1,499, but if you buy the exact same TV as a home or small business, you'll pay $999 amounting to a $500 difference.

If you've ever searched for deals on hotels or airlines, you often see prices rise or fall dramatically, sometimes several times a day.

Because every computer has a distinct Internet Protocol (IP) address, websites recognize if you've been on their sites before and that can determine how much you're quoted.

A new customer may be offered a lower price to lure their business.

These price fluctuations are partly consumer oriented and partly scientific. It's a practice called, "dynamic pricing."

"This is the change in value in offering this given price, and that is the probability that this price is accepted, the amount of money that you get for it, minus a loss that you've got one less to sell in the future," explained Preston McAfee, Yahoo's chief economist.

This might sound confusing, but McAfee said dynamic pricing is simply a way to charge different prices to different consumers because companies think they can get them to pay more or less for the same product.

For instance, some airlines may quote you a higher fare if you've been searching for a particular flight for several days.

"If I stay away from the site for a few days, the price goes down again. It suggests that the airlines are actually tracking whether they're looking, not just whether they're buying," McAfee said.

One way to possibly get a better online price is to clear your cookies from your browser.

On Internet Explorer, you do this by clicking on tools, then Internet options, then delete, and finally press OK.

You should also watch out for the price of items listed on retailing giant Amazon.com.

For example, when you do a search for a Nintendo Wii, Amazon quotes $216 in bold, red font for the gaming console. However, in smaller letters, it shows that you can buy a Wii for $179.

When you click on the lower price for the Wii, the first price that comes up is still $216, and if you scroll down, the price goes up to $344. You need to scroll further down to see the $179 price.

This is because the prices on top are from Amazon's featured merchants, which may charge more for the very same item.

McAfee said after extensive research, the best way to get low prices is really a simple equation.

"The big conclusion from my research - as a society, we don't search enough," McAfee concluded.

Searching several websites can help you find lower prices online. One way to do that is to use price comparison search engines.

Price comparison search engine websites


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