Have you heard of dynamic pricing? It’s the art of making money online by charging customers different prices depending on a range of factors such as the country you are in, your post code and even the computing device you are using.  

Online services gather and calculate this information in micro-seconds. The pricing rationale is simple, retailers charge different prices according to estimated income such as a country with a relatively high GDP, which implies a customer is willing to pay more and the number of visits to a site among other factors.

In Delhi, India the average annual income is near $23,000. In the affluent London borough of Kensington and Chelsea the average annual salary is $81,000 and in Barcelona $34,000. These are approximates and of course salaries vary according to job or vocation.

But retailers are aware of these differences and use them to price goods and services accordingly.  For instance if you want to subscribe to Apple Music, the online store will take note of the server you are ‘calling’ from and adjust the price.

If you are accessing the Apple site from a UK server you will be charged the UK monthly rate but if you are accessing the site from an Indian server the monthly fee can be a tenth of the UK price. The Apple Music prices fluctuate with Russia and India the cheapest and the UK and Switzerland the most expensive.

A look at airlines

This ‘dynamic pricing’ is also in play for a range of services from airfares to rental cars, hotels, software and even clothes and other goods. If you’re in the US for example and are planning a trip to Spain and want to rent a car in Madrid the price is likely to be significantly higher when paying for the service from a US location rather than a Spanish-based server.
  • If you’re looking for a flight go to a flight comparison site, name the destination and check the results. Each time you check again the price seems to have crept up. It feels like the airlines are tracking your interest in certain flights and raising the prices the more interest you show. 
  • Understandably, no airline has ever confirmed that the practice of using tracker cookies to raise prices is real. There would be outrage. Similarly, no price comparison site would confirm that its operations endorse this practice. The airlines say that prices fluctuate as a reflection of inventory changes, data caching techniques and the fact that prices generally get more expensive closer to departure date. 
  • That said a large tech vendor that provides dynamic pricing technology has said that among its many customers are large number of major airlines.

The beauty of a VPN

While airlines say they don’t use dynamic pricing technology, they certainly use flight route profiling. For instance, if you’re planning a flight from London to Majorca during school term breaks it would likely be marked as a leisure trip.

Airlines understand that demand for this type of flight during school holiday periods dramatically surges. They know that parents will look to find the best deals months in advance and as such, prices around those periods remain high, irrespective of the number of available seats and demand.

If you’re checking out flights on a high-end Mac in Frankfurt, dynamic pricing might assume you have higher income and show you higher prices. If you check prices for a return trip from Oslo to Paris dynamic pricing might assume you’re a business person, check your previous flight purchase history and show you ‘high’ prices knowing that you will pay for a ticket regardless of cost.
  • Using a VPN allows you to circumvent these pricing tactics by hiding your browsing history, so airfare sites can't raise prices based on information held in your browser cookies.  
  • You can also use a VPN to launch your search from another country by selecting the VPN server options. The retailer or online service will register you are coming from the country where the server is based rather than the actual country you are in. As such you may see significant price differences. The price of an airline ticket from Delhi to London bought via an Indian-based server might be considerably lower than if bought via a UK-based server. 
  • This purchase option strategy can be applied to rental cars, hotels, software and even clothes and high-end goods. For instance, rental cars paid for from a server in a country you are planning to visit could be much cheaper than paid for via a server located in the country where you live.  

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