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Prices set to what you'd pay
A home-delivery subscriber to The New York Times gets an email every few months saying the introductory discount is about to end. Pressing cancel on the website brings up a screen offering the same rate for another 36 weeks, and the subscriber clicks yes. Cable and other subscription services make the same kind of offer: stay for half off, stay for a quarter off.
Surveillance pricing models that offer in advance. A company could take a person's socioeconomic class, their typical monthly spending from a credit card statement, and an inference about where they work, perhaps from scraping LinkedIn, and estimate what they would pay for a service or even for produce at the grocery store.
With powerful computers, artificial intelligence, and 100 data points on a consumer, a company can judge the maximum someone will pay and try to charge it. Regulators have taken interest, and at least one state has pushed for a rule that companies disclose when they charge people different prices.
Why do cancel buttons trigger discounts?
A subscriber who tries to cancel reveals that the current price is too high for them, which is information a company can use. A retention offer lets a company charge full price to people who do not object while discounting only those who do. Economists call this price discrimination, charging different customers different amounts for the same product. The tactic is common in newspaper, cable, and gym subscriptions.
How far can personalized pricing go?
Economics textbooks call the extreme case first-degree price discrimination, in which a seller charges each buyer the most that buyer will pay. It needs detailed knowledge of each customer, which is why it has long been treated as a theoretical limit. Cheap data storage and prediction models have made that knowledge easier to approximate. Airlines and ride services already vary prices by time, route, and demand.
Why are regulators studying surveillance pricing?
In July 2024 the Federal Trade Commission ordered eight companies that sell pricing and analytics tools to hand over information on how they use customer data to set prices. The agency said it wanted to understand how personal details such as location, browsing history, and demographics feed into pricing. It released preliminary findings from the study in January 2025.
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