B2 – Upper Intermediate
Are you familiar with the cost of surveillance? where your personal consumption habits and demographics decide prices. By simply altering the costs of essentials like food, clothing, and services, many companies have been said to employ this pricing strategy to increase their profits in the face of minimal regional competition.
To find out more about surveillance pricing and AI price gouging, watch the video below.
Vocabulary Questions:
- What is “estimated conversion probability”? “Between 2000 and 2010, the massive collection of data such as cookies, IP location, and purchase frequency transformed how online retailers tracked consumers. Using this information, they developed models that adjusted prices based on each user’s estimated conversion probability.” Use this term in a sentence.
- What is “surge pricing”? “Powered by algorithms and artificial intelligence, surge pricing is now being used across a growing number of consumer industries, from theme parks to restaurants, retail outlets, and rock concerts.” Use this term in a sentence.
- What is “take rate”? “Research showed that the system significantly increased fares without an equivalent increase in driver earnings. Uber’s take rate in the United States rose from 32% to 42%.” Use this phrase in a sentence.
Discussion Questions:
- What are your thoughts on surveillance pricing? As a consumer, what is your reaction to how many companies practice personalized pricing?
- Does this pricing strategy make sense for a large number of customers who are unaware that their purchasing patterns determine the costs of the products they purchase? Share your thoughts.
- Share your insights on this, “Companies defend these models as mechanisms of efficiency and optimization. Critics, on the other hand, argue that they deepen economic inequalities.“
- How can we control this price structure to prevent deception of customers?
- What benefits and risks does dynamic pricing have for customers?