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?
- Talk about the benefits and risks of dynamic pricing for customers/consumers and companies/businesses.
- As a consumer, what is your reaction to how companies practice personalized pricing?
- 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 consumers protect themselves from surveillance pricing practices?
2 replies on “How AI Is Making Everything More Expensive”
* 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.”
Meaning: Estimated Conversion Probability -> is the probability that the potential customer turns into a real customer, or make the decision to buy the product.
Sentence: In a telecom company the applies sense motivation, such as, store special perfume, to increase the estimated conversion Probability.
* 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.
Meaning: Surge pricing -> it is the method used by the companies to raise the prices of a product or services (e.g. Hotels) during a high demand or high season (summer).
Sentence: Uber has used surge pricing to increase the rate to the customer, base on the data information, trafic and peak hours. There are some legal actions related with this increases that were also not transferred to the driver.
* 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.
Meaning: Take rate -> it is the commission in % that the company receive of a product or services.
Senteces: Airlines´s take rate has increased between 15% and 23% just using dynamic pricing algorithm
* Discussion Questions:
* What are your thoughts on surveillance pricing? Honestly, I disagree about this type of pricing strategy. It will always look to increase the prices, and only will decrease when the product or services has a low demand, the customer, it is always impacted.
* Talk about the benefits and risks of dynamic pricing for customers/consumers and companies/businesses.
R: In legal terms, many companies or businesses will be impacted by formal demand, due to the unjustified raising of the prices, and also, because they are using sensitive data or customer behavior to their own benefits. There are new regulation on AI, that are trying to prevent this type of used.
* As a consumer, what is your reaction to how companies practice personalized pricing? As a consumer, I’m happy at all, because at the end the price is changed without any specific reason, just a profit.
* 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.“
R: The companies have already optimize, since they apply AI and algorithm to optimize they services and product stock, for example, many retails are using this new AI, to optimize the product, reduce inventory cost and promote others.
* How can consumers protect themselves from surveillance pricing practices?
R: First of all to be inform about this practices, and try to use their ecommerce or only purchase with a mentality that there are AI or algorithm behind.
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