AI and Fear of Missing Out

Marketing Viewpoint by Ruth Winett

Is Personalized Pricing Fair?

Why has Instacart abandoned "price tests"?

On a flight to Rome, you learn that your seatmate paid $300 less for his ticket than you paid. Personalized or dynamic pricing has long been common among hotels, airlines, and more recently Amazon and other e-commerce platforms. While personalized pricing and personalized offers can help boost sales and benefit customers, it has disadvantages, too.

Personalized pricing uses data and algorithms based on machine learning to dynamically analyze and "adjust" prices as market forces change. Some of the factors considered are supply and demand, time or season, customer behavior, and competition.

Personalized pricing allows companies to

Capitalize on the unique preferences of narrow market segments
Manage inventory more effectively by exploiting changes in supply and demand.
Reward loyal customers through special pricing.
Increase customer satisfaction, leading to referrals and positive reviews.
Boost sales with holiday specials.
Exploit emerging market trends.
Make quick changes to pricing as conditions change.

However, personalized pricing requires collecting, analyzing, and exploiting customers’ personal information. A recent New York law requires companies to post the following disclaimer: "'THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA,"' reports Tim Balk in The New York Times. Ten other states are considering similar legislation. Cautious customers will resist providing personal information and take their business somewhere else.

Because of customer complaints, Instacart stopped using Eversight Software. The software allows retailers to test price sensitivity by offering different prices to different customers for the same items. Similar practices have led to calls for "ethical pricing algorithms," according to Faster Capital.

When you next request a price from a company that is known for personalized pricing, ask a family member or a friend to request a price for the same product or service. A husband and wife were quoted different fares by Uber and Lyft to the same airport even though they sought prices at the same time, Balk reported.

N.Y. Law Could Set Stage for A.I. Regulation’s Next ‘Big Battleground’ - The New York Times, Tim Balk, 11/29/25.

Dynamic pricing model: Scaling Your Startup with Dynamic Pricing: Strategies for Success – Faster Capital .

https://researve.com/articles/pricing-algorithms-dynamics-implications/

“Instacart Scraps Price Tests Amid Pushback,” Chris Wack, The Wall Street Journal, 12/23/25.

Happy New Year!

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