Understanding Surveillance Pricing
In her latest book, "Gouged", consumer advocate Lindsay Owen sheds light on a pressing issue: the use of dynamic pricing and opaque algorithms by corporations to maximize profits. This practice, often referred to as surveillance pricing, involves monitoring consumer behavior and adjusting prices in real-time to extract maximum revenue.
The Mechanics of Dynamic Pricing
Dynamic pricing isn't new, but its sophistication has increased with technology. Here's how it works:
- Software Monitoring: Companies use advanced software to track consumer behavior, market demand, and competitor pricing.
- Algorithmic Adjustments: Prices are adjusted based on data inputs, often without transparency.
- Profit Maximization: The goal is to optimize profits, sometimes at the consumer's expense.
The Role of Opaque Algorithms
Opaque algorithms are at the heart of this issue. These algorithms operate without clear guidelines or transparency, making it difficult for consumers and businesses alike to understand pricing changes. For SMEs, this lack of clarity can lead to:
- Unpredictable Costs: Sudden price hikes can affect supply chain costs.
- Competitive Disadvantage: Larger corporations may have access to more sophisticated tools, leaving smaller businesses struggling to compete.
Implications for SMEs
For small and medium enterprises (SMEs), the impact of surveillance pricing can be significant: