Some big name companies are using computer-driven, “artificial intelligence” algorithms to crunch a whole lot of data and figure out how much to charge you at checkout.
How does it work? Can you still find the best deal? What do regulators think about this?
Having what he wants simply show up on his door step is why Jonathan Volzke loves scouring the Internet for deals.
“I can go to one site and see 10, 15, 20 of the same product at different price point,” he said. "And I can generally find exactly what I want.”
Shoppers like Volzke aren’t the only ones crunching competitor’s prices. Some major companies are doing it using artificial intelligence (AI) software.
Humans write pricing algorithms and then computers capable of adapting to changes in supply and demand help update prices in near real time.
Attorney Maurice Stucke co-wrote two books on data and algorithm pricing.
“We're going from a world where people used to stamp the price on the product itself, to a world where you're buying goods and services online or even offline, but a pricing algorithm now determines it,” Stucke said.
Experts predict it will be the pricing process more businesses use in the future.
“It's not a question of if, but more a question of when,” says Gary Liu from Boomerang Commerce.
Boomerang makes AI enabled software and says it creates a more competitive market.
“By having more and more retailers that are using this technology, the retailers are able to update prices at scale in a timely, relevant way and more competition typically means consumers win in the long run,” Liu said.
Stucke is watching AI pricing algorithms with caution, concerned that we won't necessarily know when we get the best deal.
He said, “We can't assume that the market forces by themselves will necessarily get us the right price.”
An international economic council is meeting to discuss competitive “challenges raised by algorithms.”
The FTC is also watching this issue. Volzke said he will continue to bargain hunt but would like to know that the prices he compares are the lowest of the low
“I was surprised to find out that the price is derived through some complicated formula versus just the cost of the product, the cost of stocking it, the cost of mailing it," he said.
Experts say your best bet to find the best deal is to do your homework, comparing online as well as in-store and, of course, don’t forget those price comparison apps!