Nowadays, in the era of big data, it is becoming more and more common for merchants to use consumer behavior pricing (BBP). However, there are many issues involved behind this approach, which may affect the rights and interests of consumers, the profits of businesses, and the overall well-being of society.

This issue has caused widespread controversy, and conflicts have arisen between consumer rights and merchants' marketing methods.

In the era of big data, many companies have the ability to set individual prices based on consumption history.

E-commerce platforms will give different prices to different customers based on factors such as the price range and type of goods previously purchased by users. In this process, the rights and interests of consumers may be harmed.

If merchants want to realize BBP through technical means, they can maximize profits. Many merchants do this, and this pricing method becomes common.

This phenomenon is quite common in many consumer fields, especially in the online consumer field.

Consumers may face price discrimination without even realizing it.

Initially, in the absence of consumer information, merchants set a price that is the same for every consumer. This price can be called p1.

For example, some newly opened stores have not yet accumulated consumption data and can only unify their selling prices.

At the stage of t = 2, if merchants have built a BBP system in period t0 and have mastered the consumption data in period t1, then they may launch a p2r pricing strategy for old customers.

This is similar to the case where some restaurant chains offer member discounts or special discounts to frequent customers.

This is a differential pricing behavior implemented by merchants based on data.

Technological advances have reduced the cost of data storage and processing, which has increased the possibility for merchants to implement price differentiation.

If the price of the product is low, it will attract all consumers, and there will be no price difference; if the price is high, most consumers will give up purchasing, and there will be no price difference.

If p1 is within a reasonable range and new and old consumers coexist, merchants will have the opportunity to use user information to treat them differently.

When the selling price of an electronic product is at the middle level of the market and the sales are acceptable, merchants will start to study the purchasing potential of various consumers and adopt targeted pricing strategies.

When consumers experience price discrimination by merchants, their consumer surplus will be different.

There is a difference between the maximum amount that consumers are willing to pay for a product and the amount they actually pay. This difference is called consumer surplus.

Some consumers may lose part of their consumer surplus due to price discrimination.

During the peak travel period, some hotels raised prices for old customers based on data such as the number of bookings. As a result, the preferential prices originally expected by old customers will be difficult to achieve, and their consumption quota will be reduced accordingly.

New customers booked at high prices without knowing it, and their consumption surplus was even more compressed.

Social welfare is the sum of merchant profits and consumer surplus, which is significantly affected by BBP.

The actions of merchants not only affect their own profits, but also affect social welfare by affecting consumers' surplus value.

In the real estate market, some developers will set prices based on the buyer's financial ability, eagerness to buy a house and other information, and charge higher fees to those who are eager to buy a house in order to make more profits.

It seems that this will increase corporate profits, but if this phenomenon is widespread, the interests of many consumers will be harmed, and social wealth will be distributed unevenly, which will affect the well-being of the entire society.

BBP disclosure will promote company profits, but it will harm consumers and society.

Merchants only need to explain that they will set prices based on the information, and there is no need to lower prices in the early stage to hint to consumers that there is a price difference.

Some online education platforms set course fees based on the user’s study hours and course purchase history.

First, merchants can publicly implement BBP policies. Second, consumers quickly sense the unfairness of such pricing. However, in this situation, it is quite difficult for them to protect their rights and interests.

In the data era, BBP presents a complex business situation, which has a significant impact on customers, companies and even the entire society.

Are you experiencing similar behavior-based pricing today?