Price Discrimination on Priceline

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As a pricing person, priceline.com is a fascinating site. Priceline is like a “normal” travel site where travelers can purchase airline tickets, hotel rooms, and rental cars, but it also offers a “Name Your Own Price” feature. This lets people offer to pay $200 for a 4-star hotel room in Midtown Manhattan, for example, and then sees if any hotels meeting the criteria will accept the price. (That query recently saved a client of ours a few hundred dollars.)

Once you reserve a hotel room, Priceline naturally wants to sell you a rental car. Here’s where it gets interesting. If your price is accepted, Priceline takes you to a new page, that looks something like this:

Priceline also send you an email a few minutes later, which also offers rental car upsells. Notice anything different?

The prices in the email are $1-$2 more expensive. This type of testing is a great idea, especially for travel purchases where customers expect that prices will fluctuate. (Amazon got into trouble with customers for randomly varying the prices of items like DVD players to different customers.) Does anyone with more knowledge and/or experience with Priceline know whether the price differences are due to:

  • Just testing, or
  • Thinking that people who want immediate results online might be more willing to commit at a lower price (seems counterintuitive to me).
  • Something else?

By the way, when I got around to clicking on one of the links the next day, the prices bore no resemblence to the stating figures– they were much higher. And they were consistent whether I used to online page or the email page.

One Comment

  1. rsomers

    Hi Reuben,

    Good question on ‘what are they testing.’ Without knowing intent, it’s hard to intuit whether an experience like this is an elasticity test or a lack of synch between different means of messaging.

    When testing the price on the clickthrough, it’s worth clearing cookies and/or using different browsers. Oftentimes if there’s A/B testing going on they’ll cookie you to ensure that, once shown an offer, you’re not shown a different one on the next visit.

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