For You? Our Special Price!
Call me old-fashioned, but I get suspicious when a shop wants my fingerprints.
(FORTUNE Small Business) – Every week on Thrifty Thursday I push my car straight to the local filling station, where I rebelliously top off my tank. So what if I splash gas on my Buster Browns? The lingering stench reminds me (and anyone within a zip code of me) of the precious pennies I saved. Assuming I don't combust by tripping over the Sterno stove in my home office.
But I worry that such old-fashioned bargain hunting is at risk. Armed with scary technology, every business in America seems to be developing customer-specific pricing strategies based on such factors as how much a shopper spends, how loyal he is, and whether he has been completely forthright about who really caused that watermelon avalanche in aisle three. Idle at any checkout counter and you'll see shoppers handing over affinity cards, so that a cashier can punch them or stamp them or--in my case--mock the owner for having run one through the washer. The movement to customized pricing--odious enough when it was confined to airlines, hotels, and votes by members of Congress--is showing up more and taking more insidious forms.
Customized pricing isn't just about doling out discounts. Certain shoppers (the technical term is "suckers") generally pay more to subsidize everyone else. Consider the patrons of Uncle Pete's Hickory Ribs in Revere, Mass. Two years ago owner Peter Cucchiara made a bet with a diner who insisted that Cucchiara could boost sales by adding baby back ribs to the menu, even though there's no difference in taste between baby back and regular ribs. "It's the same meat as the other pork ribs, but you cannot convince people of that," says Cucchiara, 63. The baby backs (on the menu at $26.95 a rack, compared with $21.95 for loin ribs) now contribute 20% of rib sales. "Business owners traditionally have come up with prices by looking at costs," says Rafi Mohammed, 41, the customer who made the bet with Cucchiara and the author of The Art of Pricing ($24.95 retail; as low as $15.71 for shrewd shoppers). "They need to look at how much customers value the product."
Even if Mohammed is right, I think some transactions may not be suited to customized pricing. Colleges are trying it, but who wants to brag about a degree from a school known for its value proposition? Not every tradeoff makes sense, even if it does lure customers. Scott Henderson, who owns a training and career-coaching firm in Cincinnati, has packaged his advising services into three offerings. Prices vary based on how many one-on-one sessions a customer wants rather than the quality of the advice given, insists Henderson, 41, founder of ProTrain and True North Career Services. But he doesn't rule out someday charging according to an advisor's experience. Pay rock-bottom, and you'll presumably get a coach who tells you to stay where you are, even if you're unemployed.
Last month Green Hills, a supermarket in Syracuse, N.Y., started using biometric technology to deliver discount coupons. "All we need is a customer's fingerprint, and we can provide him with ten unique specials each week," says CEO Gary Hawkins, 47. Sounds okay, except that many of us have bad associations with fingerprinting--being born, say, or pleading out on a grand theft auto rap.
Why not just swab every shopper's cheek for a DNA sample? That way tech-savvy retailers could preserve the future option of boosting sales by cloning regular customers. "This is all headed to where we'll have the ability to offer different products and prices for each individual," says Hawkins. How long, then, before somebody else's Thrifty Thursday gets thriftier than mine--and falls on a Tuesday? Frankly, I'd pay a premium to keep it just the way it is.