Totally don’t get Amazon’s pricing schemes

About a week ago, I visited a friend and colleague in DC and got to meet her beautiful baby boy. While I and another friend played and cooed and giggled, my friend raved about a baby mobile (Wimmer-Ferguson Infant Stim-Mobile). The baby loved it, she loved it, her husband loved it and apparently it made everyone in her household happier. Since my college roommate welcomed the arrival of her fourth little one a few weeks ago, I decided to send her a “hey you made it through three weeks with four kids” present and what better gift than one that will totally enrapture an infant for multiples of minutes, like even tens of minutes. Peace and quiet? Yes, please.

Another good friend is due this month, (yes, it’s the year of babies, and I’m behind, sorry y’all!) and I thought, well, the mobile’s two for two, why not send it to V as well? Last Friday, I went to buy it and imagine my surprise when the price on Amazon went up by $2.64 between this week and last week. A more than 10% increase in the price of the good when I’m buying the second one? While I can’t say that I’m seeing different prices based on my purchases (if so, I just guaranteed higher prices by declaring it’s the year of babies on my blog), it does seem odd that the price would go up on something I had just purchased. I was in such a principles of micro frenzy at the moment: Marginal benefit is decreasing! Willingness to pay falls as the number of goods increases. Why aren’t they charging me less, not more? That’s what the law of demand says, #goshdarnit.

That’s flawed thinking, of course. If they are actually offering me a different price based on my buying history, and I’m going back for another one, the first one probably already proved its worth (a chorus of “I love it” from my college roommate is what prompted me to look again for V), and so perhaps now I’m willing to pay more for it.

If that didn’t confuse me enough, I got over my mini-fit enough from the other day to go back and buy it regardless of the price increase, and it was back down again, within a few cents of what I had paid the first time.

One savvy small-business owner friend suggested that Amazon might be trying dynamic pricing to determine the best price for the product. That is perhaps even more fascinating than them trying to charge individuals different prices based on their purchase history or demographics. They did some of this before, denied it, and got in trouble for it, back in 2000, if you didn’t remember. Then, they were accused of charging different prices based on demographics, but claimed it was an experiment and totally random, and promised not to do it again.

At my last look, the price is back up on the baby mobile, the highest I’ve seen it. I don’t know what’s going on, certainly something.

Update: I’m not the first to notice this. Apparently, Amazon and other retailers are experimenting with airline-like pricing. h/t @ericmbudd

Update  #2: The New York Times is ON it. h/t @thomaspace

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