Orbitz shows costlier hotel options to Mac users(online.wsj.com)
online.wsj.com
Orbitz shows costlier hotel options to Mac users
http://online.wsj.com/article/SB10001424052702304458604577488822667325882.html
144 comments
It's not the Right and Wrong interpretation that matters here -- it's the spin. Orbitz is probably run by a bunch of techies, and techies don't understand PR. Orbitz messed up in how they spun their story to the Wall Street Journal.
They could have spun their story to say that Mac users have a greater preference for, say, the Westin, Hyatt, and Marriott, whereas Windows user prefer Super 8, Days Inn, Motel 6, and Econo Lodge.
Then they would have gotten an uncontroversial story out of the WSJ -- possibly even a positive story.
This reminds me of the Coca Cola vending machines that would automatically adjust prices upward from $2 to $3 on hot, sunny days. This was met was public hostility. If instead they had promoted their machines as automatically discounting their normal price of $3 down to $2 on cold, non-sunny days, then no one would mind.
They could have spun their story to say that Mac users have a greater preference for, say, the Westin, Hyatt, and Marriott, whereas Windows user prefer Super 8, Days Inn, Motel 6, and Econo Lodge.
Then they would have gotten an uncontroversial story out of the WSJ -- possibly even a positive story.
This reminds me of the Coca Cola vending machines that would automatically adjust prices upward from $2 to $3 on hot, sunny days. This was met was public hostility. If instead they had promoted their machines as automatically discounting their normal price of $3 down to $2 on cold, non-sunny days, then no one would mind.
> If instead they had promoted their machines as automatically discounting their normal price of $3 down to $2 on cold, non-sunny days, then no one would mind.
I have a hard time believing anyone would fall for that spin.
I have a hard time believing anyone would fall for that spin.
Really? You believe that people fall for Nigerian scams and click on shady ads on the Web, but not that framing a price increase as a discount (a tactic practically every grocery store in the world uses) would make many people feel better about it? I think you're drastically exaggerating the average person's resistance to marketing.
What percentage of people fall for Nigerian scams? One per hundred thousand? One per million? One per ten million?
A marketing campaign with that rate of success would be an abysmal failure.
A marketing campaign with that rate of success would be an abysmal failure.
See my earlier reply to mikeash: http://news.ycombinator.com/item?id=4162587
In short, enough people respond to a Nigerian scam to make it one of the country's biggest industries. And that requires constant, active participation in the face of a blatant scam that gets less plausible at every step. Passively allowing your perception to be shaped by how an idea is presented is many orders of magnitude easier.
In short, enough people respond to a Nigerian scam to make it one of the country's biggest industries. And that requires constant, active participation in the face of a blatant scam that gets less plausible at every step. Passively allowing your perception to be shaped by how an idea is presented is many orders of magnitude easier.
A very small proportion of the general population falls for Nigerian scams, so I don't think that's a good example.
I still don't think it's reasonable to say that "I have a hard time believing anyone would fall for a Nigerian scam." Enough people do it to make it hugely profitable for the scammers.
And falling for a Nigerian scam requires a much higher level of gullibility and a higher level of buy-in from the victim than merely letting somebody else set your expectations with careful phrasing.
My point isn't that everyone would fall for it, but if there are enough people who fall for more blatant scams that you can build a hugely profitable business off them, there's certainly a considerable number who would fall for this.
And falling for a Nigerian scam requires a much higher level of gullibility and a higher level of buy-in from the victim than merely letting somebody else set your expectations with careful phrasing.
My point isn't that everyone would fall for it, but if there are enough people who fall for more blatant scams that you can build a hugely profitable business off them, there's certainly a considerable number who would fall for this.
In the UK, "fixed penalty notices" (parking tickets) cost e.g. £35 if you pay them within 14 days, or £70 if you pay them later. This is spun as an "early payment discount", but can also be viewed as a "late payment punishment".
A surprising number of people seem to think that they are getting a bargain if they pay early. I appreciate "a surprising number" is not a highly accurate data point :) I am currently reading Cialdini's Influence - some of the research suggests this method of offering the carrot before the stick do work.
A surprising number of people seem to think that they are getting a bargain if they pay early. I appreciate "a surprising number" is not a highly accurate data point :) I am currently reading Cialdini's Influence - some of the research suggests this method of offering the carrot before the stick do work.
Especially since people generally have an idea of what a Coke from a vending machine costs, and $3 ain't it.
Regardless, it never ceases to amaze me how controversial pricing discrimination is. Especially since most people have taken Econ 101: pricing discrimination eliminates dead-weight loss, which should be a good thing right? Nope, instant controversy.
> most people have taken Econ 101
Er. Um. No, most people have not taken Econ 101. Most graduates have not taken Econ 101. Most graduates in quantitative disciplines have not taken Econ 101.
Most people with economics degrees have taken Econ 101. A modest number of other people have. Some more have learned the basic concepts by means other than taking Econ 101. These are probably not the people complaining about price discrimination.
In any case, being surprised when people are upset because they think they're getting inferior treatment and saying "oh, but they should think of the gain in overall economic efficiency" seems like a sign of, well, not having taken Psych 101.
Er. Um. No, most people have not taken Econ 101. Most graduates have not taken Econ 101. Most graduates in quantitative disciplines have not taken Econ 101.
Most people with economics degrees have taken Econ 101. A modest number of other people have. Some more have learned the basic concepts by means other than taking Econ 101. These are probably not the people complaining about price discrimination.
In any case, being surprised when people are upset because they think they're getting inferior treatment and saying "oh, but they should think of the gain in overall economic efficiency" seems like a sign of, well, not having taken Psych 101.
I took Econ 101 - but the only reason I did so was because it was one of the only two classes available in high school that offered college credit.
If it didn't give me three hours of credit, I probably would have ended up with Texas History, or something similar.
If it didn't give me three hours of credit, I probably would have ended up with Texas History, or something similar.
And everyone has taken Psych 101...
Guy who has taken Econ 101 here.
Price discrimination doesn't eliminate dead-weight loss (it really has nothing to do with dead-weight loss), it just converts consumer surplus into producer surplus.
https://en.wikipedia.org/wiki/Price_discrimination#Types_of_...
Price discrimination doesn't eliminate dead-weight loss (it really has nothing to do with dead-weight loss), it just converts consumer surplus into producer surplus.
https://en.wikipedia.org/wiki/Price_discrimination#Types_of_...
Did you read the article you just linked to? Here's a direct quote "From a social welfare perspective though, first degree [perfect] price discrimination is not necessarily undesirable. That is, the market is entirely efficient and there is no deadweight loss to society."
Without price discrimination, unless you're operating tax-free and subsidy-free there is always a dead-weight loss. Perfect price discrimination eliminates it. It is literally right there in the article you just linked to.
Without price discrimination, unless you're operating tax-free and subsidy-free there is always a dead-weight loss. Perfect price discrimination eliminates it. It is literally right there in the article you just linked to.
Actually, it does both - capturing consumer surplus for buyers who pay more than the average and eliminating deadweight loss for buyers who pay less than the average.
[Technical note: By "average" I really mean the optimal price if the producer is only allowed to set a single price point. But let's not quibble.]
[Technical note: By "average" I really mean the optimal price if the producer is only allowed to set a single price point. But let's not quibble.]
"buyers who pay less than the average" (which I'm assuming means buyers whose reservation price is below the market equilibrium) do not qualify as a deadweight loss. Deadweight loss refers specifically to:
a) buyers who cannot buy something which causes an economic benefit (they gain more than it costs to produce). Examples: shortages, monopoly pricing.
b) buyers who buy something that does not cause a net economic benefit (it costs more to produce than they gain). Examples: gov't subsidies artificially reduce price, negative externalities not factored into price.
See http://en.wikipedia.org/wiki/Deadweight_loss.
a) buyers who cannot buy something which causes an economic benefit (they gain more than it costs to produce). Examples: shortages, monopoly pricing.
b) buyers who buy something that does not cause a net economic benefit (it costs more to produce than they gain). Examples: gov't subsidies artificially reduce price, negative externalities not factored into price.
See http://en.wikipedia.org/wiki/Deadweight_loss.
Okay, let's take the monopoly example from wikipedia. Firm prices at monopoly price (60 cents), deadweight loss because all transactions for buyers with marginal benefit between 10 and 60 cents do not occur. Assume some identifiable group of people exists with marginal benefit < 60 cents (e.g., students). Firm introduces student discount => deadweight loss is smaller. Therefore, price discrimination can reduce deadweight losses.
Close, but your example is missing a crucial piece. Specifically, the marginal cost of producing the product.
Let's say the MC is 20 cents at the scale produced (Q1). The second group (students) get a MB of let's say 30 cents. They will not buy at a price of 60 cents, therefore there is a deadweight loss (MC < MB to students, but they do not have the good). If the monopolist can expand their output to Q1 + Q2 (where Q2 is the student sales) while keeping their MC under 30 cents, they can reduce the DWL.
Let's say the MC is 20 cents at the scale produced (Q1). The second group (students) get a MB of let's say 30 cents. They will not buy at a price of 60 cents, therefore there is a deadweight loss (MC < MB to students, but they do not have the good). If the monopolist can expand their output to Q1 + Q2 (where Q2 is the student sales) while keeping their MC under 30 cents, they can reduce the DWL.
Umm... so you agree? Price discrimination can reduce DWL?
By the way, there's no need to assume MC is a function of Q since that just complicates the example for no benefit (in the wiki article notice that MC is just a constant 10 cents). And yes, though I didn't stress it, of course the discount price must still be greater than the MC (and so in the range of 10 - 60 cents).
By the way, there's no need to assume MC is a function of Q since that just complicates the example for no benefit (in the wiki article notice that MC is just a constant 10 cents). And yes, though I didn't stress it, of course the discount price must still be greater than the MC (and so in the range of 10 - 60 cents).
I didn't understand your argument at first; after you clarified I believe you are correct (with the corrections mentioned). My comment was intended to fix some flaws in your argument that rendered it incomplete, not incorrect.
I believe the constant MC assumption is dangerous though. MC is rarely fixed in microeconomics. It is almost always assumed to be an approximately linear function of quantity. Thus, increasing production will always increase MC. You'll need to hire more workers, pay more overtime, buy more expensive supplies, whatever (in the short run; in the long run firms expand production and the supply curve shifts). The assumption that MC won't change is almost always incorrect, and the MC changes affects whether the argument is valid or not.
Sorry if I'm sounding pedantic, just pointing out what my econ prof would've said to me about this argument.
EDIT: and I'm not trying to imply that you don't know any of this, just that it may benefit readers who have less economics exposure.
I believe the constant MC assumption is dangerous though. MC is rarely fixed in microeconomics. It is almost always assumed to be an approximately linear function of quantity. Thus, increasing production will always increase MC. You'll need to hire more workers, pay more overtime, buy more expensive supplies, whatever (in the short run; in the long run firms expand production and the supply curve shifts). The assumption that MC won't change is almost always incorrect, and the MC changes affects whether the argument is valid or not.
Sorry if I'm sounding pedantic, just pointing out what my econ prof would've said to me about this argument.
EDIT: and I'm not trying to imply that you don't know any of this, just that it may benefit readers who have less economics exposure.
Where did the dead-weight loss come from? It's just consumer and producer surplus. There is no dead-weight loss in this situation as we've been discussing it.
https://en.wikipedia.org/wiki/Economic_surplus
https://en.wikipedia.org/wiki/Economic_surplus
From the trades that don't happen because the producer can't sell to certain segments at a lower price (for fear of reducing his profit on other segments). I suppose it's worth noting that this isn't an issue in perfectly competitive markets (since there price = marginal cost). But, outside econ-101, there aren't really many perfectly competitive markets.
By the way, as I mentioned in my first post, I definitely agree this is about capturing consumer surplus too.
By the way, as I mentioned in my first post, I definitely agree this is about capturing consumer surplus too.
In my opinion this is not about econ 101.
It seems obvious why two people getting the exact same product / service but paying a different amount is a controversial matter. Especially, since the discriminating factor is the fact that you are willing to pay more!
If a vendor wants to price discriminate, there are ways of doing it, such as loyalty programs or rewards, which do not 'offend' the consumer and still manage to capture (most of) the consumer surplus.
In this case though, this is not what Orbitz is doing, they keep the prices constant but show different default options.
Isn't that the right way to do it? If Mac users choose options (a, b, c) the most often then these are the ones that you should default to. And the same for non-Mac users but with frequent options (d, e, f).
And in this case it happens to be that, on average, (a, b, c) have higher prices than (d, e, f).
It seems obvious why two people getting the exact same product / service but paying a different amount is a controversial matter. Especially, since the discriminating factor is the fact that you are willing to pay more!
If a vendor wants to price discriminate, there are ways of doing it, such as loyalty programs or rewards, which do not 'offend' the consumer and still manage to capture (most of) the consumer surplus.
In this case though, this is not what Orbitz is doing, they keep the prices constant but show different default options.
Isn't that the right way to do it? If Mac users choose options (a, b, c) the most often then these are the ones that you should default to. And the same for non-Mac users but with frequent options (d, e, f).
And in this case it happens to be that, on average, (a, b, c) have higher prices than (d, e, f).
Let's say Best Buy could magically learn your income and checking account balance when you walked in the door. And just before you walked in, employees rushed and hid all of the lower-priced TVs and computers. How would you feel about that?
Pricing discrimination is controversial because it shifts most of the surplus away from consumers. A lot of people come out of econ 101 thinking any more efficient solution is inherently better, but efficiency is only one factor to consider.
People don't like being ripped off.
Price discrimination is revenue optimization for the vendor, it's not eliminating some efficiency -- it's steering me to part with more of my economic resources.
I expect the kind of behavior from a salesperson with whom I am negotiating -- that's a customary way to do business in that model.
In the United States, we learn about fixed-cost in the grocery store -- an apple cost $1 whether I have $0.50 or $5,000 in my wallet. When I'm buying a product or service on what appears to be a fixed-cost basis, I perceive your "pricing discrimination" as taking advantage of me.
Price discrimination is revenue optimization for the vendor, it's not eliminating some efficiency -- it's steering me to part with more of my economic resources.
I expect the kind of behavior from a salesperson with whom I am negotiating -- that's a customary way to do business in that model.
In the United States, we learn about fixed-cost in the grocery store -- an apple cost $1 whether I have $0.50 or $5,000 in my wallet. When I'm buying a product or service on what appears to be a fixed-cost basis, I perceive your "pricing discrimination" as taking advantage of me.
Let me clarify my point. Our economy is based on the notion that things are worth what people are willing to pay for them. What if some people are willing to pay more than others? Then businesses have to choose: either they practice price discrimination, i.e. try to sell each and every unit for exactly what that person was willing to pay, or they set one price that will attempt to maximize their profit.
You can find many examples of each. Anyone who auctions off their goods practices price discrimination. i.e. 3 identical baseball cards auctioned separately on Ebay fetch 3 separate prices. Same thing with a seller in a street market who gives different prices to different buyers (tourists vs. locals) and then haggles with each and every buyer.
My point is, people seem fine with this kind of price discrimination in a lot of settings, but not all settings. For some reason, there are certain settings and triggers that change their view from "hey this is how things are supposed to work, this thing is worth what I'm willing to pay" to "hey I'm getting ripped off!" Why is that? And what are the triggers?
Businesses put a lot of work into finding pricing discrimination "tricks", including discounts and premium upgrades, and that on the whole is a fascinating topic to me.
You can find many examples of each. Anyone who auctions off their goods practices price discrimination. i.e. 3 identical baseball cards auctioned separately on Ebay fetch 3 separate prices. Same thing with a seller in a street market who gives different prices to different buyers (tourists vs. locals) and then haggles with each and every buyer.
My point is, people seem fine with this kind of price discrimination in a lot of settings, but not all settings. For some reason, there are certain settings and triggers that change their view from "hey this is how things are supposed to work, this thing is worth what I'm willing to pay" to "hey I'm getting ripped off!" Why is that? And what are the triggers?
Businesses put a lot of work into finding pricing discrimination "tricks", including discounts and premium upgrades, and that on the whole is a fascinating topic to me.
It wouldn't surprise me. I've suspected for years that they do differential pricing, but I got confirmation a few days ago.
I just bought tickets to Las Vegas on Friday. I got through the checkout process (choosing a flight and a hotel) and then they said there was a "problem" and kicked me back to the beginning of the process. I went through it again, choosing the exact same flights (with the same number of seats available) and the prices were 20-30% higher. The available seats were identical (I was buying for a same-day flight so there were only a handful remaining and it was easy to see that they were the same). I went ahead and bought since it at was the last minute, but I made a mental note not to ever bother coming back.
It's happened so frequently to me on this and other aggregators like Travelocity that it may even be intentional.
Perhaps they display competitive prices so they will be chosen by people who are comparison shopping (either manually or through a site like kayak.com). Then once you've asserted your willingness to buy by moving through the flight selection process they randomly restart you with higher prices on the (probably likely) belief that you have already mentally committed to Orbitz.
I just bought tickets to Las Vegas on Friday. I got through the checkout process (choosing a flight and a hotel) and then they said there was a "problem" and kicked me back to the beginning of the process. I went through it again, choosing the exact same flights (with the same number of seats available) and the prices were 20-30% higher. The available seats were identical (I was buying for a same-day flight so there were only a handful remaining and it was easy to see that they were the same). I went ahead and bought since it at was the last minute, but I made a mental note not to ever bother coming back.
It's happened so frequently to me on this and other aggregators like Travelocity that it may even be intentional.
Perhaps they display competitive prices so they will be chosen by people who are comparison shopping (either manually or through a site like kayak.com). Then once you've asserted your willingness to buy by moving through the flight selection process they randomly restart you with higher prices on the (probably likely) belief that you have already mentally committed to Orbitz.
The innocuous possibility is that prices change several times during the day of a flight, and price changes for incomplete orders cause bad system behavior and a strange user experience.
Flight price change all the time. This "go back to the start and its a different price" happens often. As a point of data, I've had it happen, but the flights have been cheaper.
That's a very different issue than the one outlined in TFA though: TFA talks about presenting different (more expensive) options by default after noting a trend that those were the options usually selected by users of the target platform.
Not about tacking on extra charges on the same product.
Not about tacking on extra charges on the same product.
It is also possible, that they show you a cached price first and one step before the confirmation they check back with the airline if they price really is the same. In your case the airline might have increased the fare, for whatever reason, shortly before you started your booking process.
That's definitely possible. I just have a hard time giving any company involved (airline or aggregator) the benefit of the doubt...
This can happen if someone else buys that cheap seat before you complete your booking.
I've often tried to coordinate buying tickets with others online and we can all be chatting on the phone as we're all looking at our own computer screens and we all read off different prices.
Well, flight pricing is never simple any which way anyway.
I've often tried to coordinate buying tickets with others online and we can all be chatting on the phone as we're all looking at our own computer screens and we all read off different prices.
Well, flight pricing is never simple any which way anyway.
Right, but my point was that no one had bought those tickets--because there were so few seats it was apparent it was the same flight with the same seats available.
The hotel also increased by a significant amount.
The hotel also increased by a significant amount.
1. Airline ticket prices can change several times within the same hour.
2. Once you have done a booking search many companies store this information in a cookie (or otherwise) to prevent you from seeing cheaper prices on subsequent searches. Try deleting your cookies next time...it usually works for me. Also I never log in to my account until I know exactly what I want.
2. Once you have done a booking search many companies store this information in a cookie (or otherwise) to prevent you from seeing cheaper prices on subsequent searches. Try deleting your cookies next time...it usually works for me. Also I never log in to my account until I know exactly what I want.
Amazon does this. If you look at a product and then come back later to buy it the price will be higher than it is if you bought it immediately after looking. If you want to get the best prices and look up things whenever you want, use one computer to do lookups and one to buy.
I stopped using Travelocity after a repeated problem with this. I was booking a flight which they listed for about $300, and when I got to the end they said, oops, there's been a sudden change, it's now $900.
So of course I bailed out of the process. A little while later, I checked Travelocity again and it was back to $300. Went through to the end again and, same "sudden change", now $900.
As I recall, this persisted for something like a day before I finally gave up and wrote them off as a bunch of scammers.
So of course I bailed out of the process. A little while later, I checked Travelocity again and it was back to $300. Went through to the end again and, same "sudden change", now $900.
As I recall, this persisted for something like a day before I finally gave up and wrote them off as a bunch of scammers.
Another interesting one is when Capital One showed different rates by browser types by using a demographic study of wealth based on browser via http://www.conversionvoodoo.com/blog/2010/11/do-different-we...
The Capital One example actually turned out to just be normal split testing, not based on the visitor's browser.
HN discussion thread about it: https://news.ycombinator.com/item?id=1861037
HN discussion thread about it: https://news.ycombinator.com/item?id=1861037
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I also find this fascinating.
As someone involved in creating recommendation systems for web sites based on various user behavior signals, I can see adding a "what type of browser do they use" and "what type of OS do they use" intelligence in the future to further segment users.
Mac ownership must be a proxy for "household income". Brilliant.
As someone involved in creating recommendation systems for web sites based on various user behavior signals, I can see adding a "what type of browser do they use" and "what type of OS do they use" intelligence in the future to further segment users.
Mac ownership must be a proxy for "household income". Brilliant.
It's a demographic like any other, even if only aspirational.
Would be easy enough to compare prices on windows/linux in a vm on my mac though. And take note of the companies that do it. Something else to add to comparison services as well, aka does site xyz.com discriminate based on os/browser?
Important note: the prices are not different. Just that more 5-star hotels are shown in the search results to Mac users. If they were charging more for the same hotel, it would be evil not brilliant. :)
We were doing this back in early 2001 on this site:
http://web.archive.org/web/20010722191804/http://travelmall....
We tried both adjusting individual prices for Mac users (and didn't see any statistical difference from the price sensitivity for non-mac users, same as we didn't see statistically significant differences between older and newer Windows version users), and skewing the search result price range for Mac users compared to non-Mac users (and we certainly saw statistically significant improvements there in terms of average dollars per room-night). In the long run though, although we proved to ourselves it worked, the Mac userbase back then was so small that the overall bottom line effect wasn't big enough compared to the engineering and marketing effort to keep it working - I think it all vanished in the big 2004 rewrite of the site's back end.
http://web.archive.org/web/20010722191804/http://travelmall....
We tried both adjusting individual prices for Mac users (and didn't see any statistical difference from the price sensitivity for non-mac users, same as we didn't see statistically significant differences between older and newer Windows version users), and skewing the search result price range for Mac users compared to non-Mac users (and we certainly saw statistically significant improvements there in terms of average dollars per room-night). In the long run though, although we proved to ourselves it worked, the Mac userbase back then was so small that the overall bottom line effect wasn't big enough compared to the engineering and marketing effort to keep it working - I think it all vanished in the big 2004 rewrite of the site's back end.
Much easier to use an user agent switcher plugin while in incognito mode.
True, but user agent switching won't get around someone testing for browser features and ignoring the agent string.
please explain how would you go about detecting linux/windows/mac without agent string (with the exception of detecting Safari/Konqueror/IE)
Screen size? Fonts?
Screen size? Fonts?
It's much harder, but possible. You could look at browser features in JS and compare them to what's known for browsers to do and guess the browser. Some browsers are highly likely to be certain ODs.
It's highly highly likely that they are just looking at user agent strings.
It's highly highly likely that they are just looking at user agent strings.
Well, the code to look at JS features must be written in JS itself (adding features to an array, sending them over JSON, redirecting to a new page, etc.). I'll pull out my Dev Console and fuck with it (set a breakpoint and change that part of the code), and make them think I'm using lynx instead of Safari.
So, I don't think you can ever really know what browser your users use.
So, I don't think you can ever really know what browser your users use.
Sure. And even if you could, you couldn't really know whether they like cheap hotels based on it. The question is whether you can get a signal that's statistically well correlated enough to be useful.
Actually in this case you could infer they like cheap hotels (or don't like expensive ones). If someone is willing to go to a lot of effort to hide who they are, to hunt for bargains, or check they are getting a good price, they are probably very price sensitive, and would like the cheapest hotel you have, they've shown they are willing to waste their own time to get cheaper prices.
Not reliably. There are plenty of affluent privacy nuts who care a lot about making sure they're not tracked but aren't particularly price-sensitive.
You know how web developers are constantly bitching about incompatibilities between web browsers and javascript engines?
That's how.
That's how.
Seems reasonable - next time you are at the dentist check out the Yachting and golf magazines. They aren't advertizing Timex on the back cover.
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Inevitably, this will make people like me (Mac user that considers $50 a night overpriced) book through other sites. Does orbitz think I only price through them? Most people I know price at least a half dozen locations before deciding, so as long as everyone doesn't jack prices for Mac users, Mac user's business will naturally migrate to whomever doesn't try to screw us.
It's only the default sort, though, which I already usually think of as an attempt to either guess my preferences, or game some kind of referral system on their part (even if I don't normally assume it's based on OS choice). If you want to sort by objective factors like Price or Distance, you can still do that fine, which is what I normally do.
If they believe Mac users are happy to pay higher prices they most likely also believe Mac users are less prone to shopping around.
I bet they are right too.
I think mac users have demonstrated they are for the most part willing to pay more for something they perceive as offering a better experience. You can't make that choice if you're some broke dude surfing from a 400 dollar *nix box, so I think it is given that average mac users are less price sensitive - the more cash you have, the more your time is valued imho.
FWIW, posting this from a slackware box with my mac cooling in the next room. So by all means, show me the cheap stuff first :)
I think mac users have demonstrated they are for the most part willing to pay more for something they perceive as offering a better experience. You can't make that choice if you're some broke dude surfing from a 400 dollar *nix box, so I think it is given that average mac users are less price sensitive - the more cash you have, the more your time is valued imho.
FWIW, posting this from a slackware box with my mac cooling in the next room. So by all means, show me the cheap stuff first :)
They aren't charging Mac users more. They have just found that Mac users tend to spend more on hotels. Therefore instead of showing the least expensive at the top of the list they should ones $20-30 more. If Mac users are in general more likely to purchase this anyway they are just making the search easier for users. You can still get the cheaper prices you just have to scroll down or change the sort.
I don't believe they are increasing prices, but rather showing different, better quality hotels that are pricier to Mac users.
Are they trying to screw us or trying to predict what they think we want?
Are they simply showing pricier offers, or are they showing the exact same offers but with the prices raised? The former is annoying but not inherently evil, but the latter would be terrible.
In Econ, the latter is called differential pricing and there is nothing evil about it at all.
http://www.pricingforprofit.com/pricing-explained/differenti...
http://www.pricingforprofit.com/pricing-explained/differenti...
That depends on your moral code, of course.
We knew that _downward_ differential pricing worked (in terms of increasing conversions) - a popup saying "Hi, you're a return visitor to our website, we can discount this room rate 10% if you book today) always increased conversions.
We sure as hell _experimented_ to see if the decrease in conversions by bumping margins (and hence prices) up was worthwhile in terms of total profit.
I'd happily make an argument that if the first is morally "OK" then so is the second…
We sure as hell _experimented_ to see if the decrease in conversions by bumping margins (and hence prices) up was worthwhile in terms of total profit.
I'd happily make an argument that if the first is morally "OK" then so is the second…
a popup saying "Hi, you're a return visitor to our website, we can discount this room rate 10% if you book today" always increased conversions.
Did you also test a popup saying "Hi, you're a first-time visitor to our website, we can discount this room rate 10% if you book today"? :)
Did you also test a popup saying "Hi, you're a first-time visitor to our website, we can discount this room rate 10% if you book today"? :)
Which in turn depends on your view of Man.
It't NOT differential pricing, that would be offering the same product top Mac users for more money.
They are instead offerent more expensive hotels to Mac users - on the reasonable assumption that Mac owners are higher spenders compared to somebody connecting from a free PC in a public library.
They are instead offerent more expensive hotels to Mac users - on the reasonable assumption that Mac owners are higher spenders compared to somebody connecting from a free PC in a public library.
I presume you were downvoted because the responder specifically referred to the "latter" description: "or are they showing the exact same offers but with the prices raised".
The article title is far less ambiguous than the HN title: "On Orbitz, Mac Users Steered to Pricier Hotels"
Hacker News shows more sensationalist titles to Hacker News users.
The former, and it seems to vary by location. from the article:
[...] search results for hotels in cities including Las Vegas,
Orlando, Philadelphia and Boston were the same for both Macs and PCs.
A New York search turned up more expensive hotels for Mac users, but
only after the first 20 listed.
[...] A Mac search for a hotel in Miami Beach for two nights in July
displayed costlier boutique hotels on the first page of results, such
as Sagamore, the Art Hotel and the Boulan South Beach, that weren't
displayed on the PC's first page. Among hotels appearing in both searches,
some pricier options (such as the $212 Eden Roc Renaissance and the $397
Fontainebleau) were listed higher on the Mac. [...]I view the former as helpful, not annoying. Featuring semi-personalized offers saves me time and energy.
With e-commerce it only makes sense to put the best-fit offers in the front of the store, for everyone involved.
With e-commerce it only makes sense to put the best-fit offers in the front of the store, for everyone involved.
It would be helpful if that is, in fact, what you want. Owning a Mac is correlated with having more disposable income available, but that doesn't necessarily mean you want to get a costlier hotel room. I would hope they use other data points too, not just using a Mac, to decide whether the user would be amenable to pricier offers.
Owning a Mac is correlated with having more disposable income available
Or, owning a Mac may be positively correlated with having less disposable income, since the higher price of a Mac took more of your disposable income to purchase.
Or, owning a Mac may be positively correlated with having less disposable income, since the higher price of a Mac took more of your disposable income to purchase.
Income by definition is a flow of money, and buying a Mac is a one-time purchase with high barier of entry (hence need for higher income).
Does this means that Linux users get the best deals? Or maybe it's Windows users with cracked copies of Windows.
When the Humble Indie Bundles are on sale (where consumers can pay what they want), the stats showed the average Linux user paid more than Mac or Windows users.
I don't think that necessarily carries over. For the most part, all the Linux users I know contribute more simply because they want to encourage other developers to create games for Linux. It's a point of price, they can point at, and say "Hey, Linux users spent more then Windows or Mac users."
Another curious statistic: according to the sales numbers on http://www.humblebundle.com/, Linux users on average pay more ($12.50) for the choose-your-price bundle than Mac ($9.99) or Windows ($7.98) users.
I would guess that this is either related to user enthusiasm for more professionally developed games (explaining why Windows users aren't as excited), or a desire to support the creation of cool stuff and be part of a community around it.
Additionally (ceteris parabus) a Linux user would be richer as they have not spent money on an OS (except the odd RHEL user). However I doubt this makes a statistical difference.
But you left out the counter-balance: far more revenue is generated from Mac and Windows users in total. So while Linux users are willing to pay more, there's far less of them willing to pay at all.
Far more revenue is generated from Windows. Mac is a very distant second. The camembert says something like For each 6$ from windows users, there are 2$ from mac users and 1$ from linux users...
I wonder how Linux users are profiled.
They're redirected to the habitat for humanity site where you can find plans to build your own hotel, and possibly enlist some volunteers to help.
They're redirected to this: http://cdn.arstechnica.net/wp-content/uploads/2012/06/torval....
They are redirected to the couch surfing site.
Redirected to Airbnb of course.
I assume only Ubuntu users are so redirected.
Arch --> Ikea.
LFS --> a forest.
Arch --> Ikea.
LFS --> a forest.
Debian --> a commune
We have park benches available now.
Note: - Guests may be required to construct their own bench
Note: - Guests may be required to construct their own bench
[deleted]
It's not like someone at Orbitz sat down, rubbed his/her hands with glee and said with an evil laugh, "ha! I will rip those Mac users off!"
In all likelihood, someone used the browser type as a feature in their model. It so happens that Mac users are (or were) younger, slightly more financially successful and like to splurge a little (e.g., the Mac itself, when comparable Windows laptops are significantly cheaper). Hence the model learned that it can show more expensive hotels to users with that specific browser type.
In all likelihood, someone used the browser type as a feature in their model. It so happens that Mac users are (or were) younger, slightly more financially successful and like to splurge a little (e.g., the Mac itself, when comparable Windows laptops are significantly cheaper). Hence the model learned that it can show more expensive hotels to users with that specific browser type.
Not that familiar with most of the hotel examples shown but, for Las Vegas at least, both the hotel examples shown are pretty low-end Strip Casinos. (i.e., at least this example isn't about significantly different classes of properties)
As a Mac user I hate this but I do think you should (on applications at least) use different models for each platform. Angry Birds monetizes differently on Android and iOS. This isn't a justification for Orbitz' behaviour though.
"I don't understand the Orbitz debacle.
First, they're not charging Mac users more than Windows users for the same hotels / services. All users, regardless of OS, have access to the same set of options at the same prices. This is ad targeting, not price manipulation; they're (essentially) showing Mac users different advertisements -- for higher-priced options. You're free to not click on the ad; if Orbitz chose wrong, they're losing money (by wasting ad space on their page)."
Rest here: https://www.facebook.com/tudorb/posts/10100307597913113
First, they're not charging Mac users more than Windows users for the same hotels / services. All users, regardless of OS, have access to the same set of options at the same prices. This is ad targeting, not price manipulation; they're (essentially) showing Mac users different advertisements -- for higher-priced options. You're free to not click on the ad; if Orbitz chose wrong, they're losing money (by wasting ad space on their page)."
Rest here: https://www.facebook.com/tudorb/posts/10100307597913113
I'm cofounding a startup in the travel space and our cofounder has a lot of domain expertise and according to him it's illegal to show a rate lower on Expedia than say Marriott.com. There are exceptions as always, but for the most part this is true. Now I don't know if this applies to the opposite..I guess you could just add to a price but I still would think that's fishy. Anyway, just a little tid bit of knowledge.
Edit: Turns out they prices weren't different, just showing pricier results first.
Edit: Turns out they prices weren't different, just showing pricier results first.
"Illegal" is not _quite_ the right word.
When I got out of the online hotel booking game (back in '08) - all of the major chains were starting to include terms like that in their contracts (or had been for a few years), and were leaning on all the wholesalers (Pegasus/Sabre/Gullivers/Octopus) to push and enforce those decisions on small players (like us) who booked through them. Our lawyers said there was a _strong_ chance that these contract provisions wouldn't stand up in court (here in Australia), but it was obvious to everyone that it wasn't worth getting into expensive legal fights with the suppliers of the "product" our business relied on…
When I got out of the online hotel booking game (back in '08) - all of the major chains were starting to include terms like that in their contracts (or had been for a few years), and were leaning on all the wholesalers (Pegasus/Sabre/Gullivers/Octopus) to push and enforce those decisions on small players (like us) who booked through them. Our lawyers said there was a _strong_ chance that these contract provisions wouldn't stand up in court (here in Australia), but it was obvious to everyone that it wasn't worth getting into expensive legal fights with the suppliers of the "product" our business relied on…
It probably violates the contract that the OTA has with Marriott. Hotel chains typically offer a best rate guarantee that states that you cannot find a lower rate anywhere else - and if you do, they'll match it and provide an additional benefit (free night, $50 amex).
OTA's eat into margins of the hotels because they get a good size c omission from the bookings - no hotel chain would negotiate a contract that let an OTA undercut them.
OTA's eat into margins of the hotels because they get a good size c omission from the bookings - no hotel chain would negotiate a contract that let an OTA undercut them.
Amazon also shows costlier suggestions to customers who have bought costlier products before. Orbitz is doing what they can with their comparatively limited knowledge.
The ironic thing about this is that many airfare websites have a German version with curiously higher prices than the US version, and that Apple's computers themselves are more expensive in Europe. (Sadly I'm never sure how much of this can be explained with taxes.)
The ironic thing about this is that many airfare websites have a German version with curiously higher prices than the US version, and that Apple's computers themselves are more expensive in Europe. (Sadly I'm never sure how much of this can be explained with taxes.)
Screenshots for those of us stuck behind the paywall: http://imgur.com/a/VtNRf
Paste the article title ("On Orbitz, Mac Users Steered to Pricier Hotels") into Google.
The Wall Street Journal article should be the first result. Click on it.
You should be able to see the whole article. The WSJ appear to give you the full text when the referrer is google.
The Wall Street Journal article should be the first result. Click on it.
You should be able to see the whole article. The WSJ appear to give you the full text when the referrer is google.
Does this violate the copyright of WSJ? I hate the paywalls, but posting the screenshots seems wrong to me.
[deleted]
One interesting insight that was edited from the final article; Linux users tend to not book hotels, but prefer building campgrounds from scratch.
You know which Mac users are NOT seeing those higher cost travel options? Apple Store employees...
The real question is who paid for this article - Parallels or VmWare :-) Kidding.
Paywall. :(
Protip: many paywalls, including this one can be circumvented by using Google's URL redirection service:
http://www.google.com/url?q=http://online.wsj.com/article/SB...
Simply use 'www.google.com/url?q=' and paste in the address of the article which has a paywall.
Simply use 'www.google.com/url?q=' and paste in the address of the article which has a paywall.
That's awesome, thanks .. how does it work? I mean why does it allow google to bypass their paywall.
Because google does not like to index pay-walled articles. They are either not indexed at all, or given a low score. This makes complete sense because Google wants their users to be happy and users are usually not very happy when they hit a pay-wall.
Online publications, on the other hand, really want their paywalled articles to be indexed by Google. You may remember Murdoch did a lot of complaining about this a couple of years ago. So now publications do a little trick where they make the whole article available to people coming from Google but offer a paywall to anyone else. This means that you can usually access the entire article if you are redirected from google.
Online publications, on the other hand, really want their paywalled articles to be indexed by Google. You may remember Murdoch did a lot of complaining about this a couple of years ago. So now publications do a little trick where they make the whole article available to people coming from Google but offer a paywall to anyone else. This means that you can usually access the entire article if you are redirected from google.
Interesting, thanks. It seems counter-intuitive that they would allow all users from google to see the full article, since that's where you'd imagine a lot of traffic would come from.
So that google doesn't knock them down in ratings or outright delist them.
cool, just turned it into a bookmarklet http://paywall-killer.blogspot.com/
I posted the same article a few minutes earlier using the Google cache link: http://news.ycombinator.com/item?id=4159481
[deleted]
As much as I dislike being asked to pay up to access WSJ content, I am consistently surprised that the paper has managed to retain its readership even in these increasingly hard times for publishing in general. At one point you got access to Barron's free with a WSJ signup. I guess they figured they didn't need to sweeten the deal anymore.
I still remember, several years ago, when NYT declared it had hit its target paywall numbers to sustain operations and announced it didn't see a need to continue with the paywall model only to later fumble (and decide on the 10 articles cap).
Buffet has recently bought some 63 newspapers. He suggested that the dominant model of free access is unsustainable.
The article is actually this long --
BY DANA MATTIOLI
Orbitz Worldwide Inc. has found that people who use Apple Inc.'s Mac computers spend as much as 30% more a night on hotels, so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see.
The Orbitz effort, which is in its early stages, demonstrates how tracking people's online activities can use even seemingly innocuous information—in this case, the fact that customers are visiting Orbitz.com from a Mac—to start predicting their tastes and spending habits.
Orbitz executives confirmed that the company is experimenting with showing different hotel offers to Mac and PC ...
BY DANA MATTIOLI
Orbitz Worldwide Inc. has found that people who use Apple Inc.'s Mac computers spend as much as 30% more a night on hotels, so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see.
The Orbitz effort, which is in its early stages, demonstrates how tracking people's online activities can use even seemingly innocuous information—in this case, the fact that customers are visiting Orbitz.com from a Mac—to start predicting their tastes and spending habits.
Orbitz executives confirmed that the company is experimenting with showing different hotel offers to Mac and PC ...
If you're running AdBlock you won't see the "click here to subscribe now!" pitch.
The ellipses isn't the end of the article!
The ellipses isn't the end of the article!
Maybe paywall sites should be banned from HN.
Maybe best just to clearly disclose it somehow. I know it's not apples with apples, but should we ban patio11's potential $5 comprehensive ebook because it's not free or behind an email registration? Or (apples with a non-fruit) 'Show HN' efforts that are paid services?
Actual article text:
Orbitz found Mac users on average spend $20 to $30 more a night on hotels than their PC counterparts. The Orbitz effort, which is in its early stages, demonstrates how tracking people's online activities can use even seemingly innocuous information—in this case, the fact that customers are visiting Orbitz.com from a Mac—to start predicting their tastes and spending habits. Orbitz executives confirmed that the company is experimenting with showing different hotel offers to Mac and PC visitors, but said the company isn't showing the same room to different users at different prices. They also pointed out that users can opt to rank results by price. Journal Community
Orbitz found Mac users on average spend $20 to $30 more a night on hotels than their PC counterparts, a significant margin given the site's average nightly hotel booking is around $100, chief scientist Wai Gen Yee said. Mac users are 40% more likely to book a four- or five-star hotel than PC users, Mr. Yee said, and when Mac and PC users book the same hotel, Mac users tend to stay in more expensive rooms. "We had the intuition, and we were able to confirm it based on the data," Orbitz Chief Technology Officer Roger Liew said. The sort of targeting undertaken by Orbitz is likely to become more commonplace as online retailers scramble to identify new ways in which people's browsing data can be used to boost online sales. Orbitz lost $37 million in 2011 and its stock has fallen by more than 74% since its 2007 IPO. The effort underscores how retailers are becoming bigger users of so-called predictive analytics, crunching reams of data to guess the future shopping habits of customers. The goal is to tailor offerings to people believed to have the highest "lifetime value" to the retailer. Orbitz first confirmed Mac users' preferences in October and began working them into the complicated mix of factors that determine its search results. The effect isn't always obvious. In tests performed by The Wall Street Journal, search results for hotels in cities including Las Vegas, Orlando, Philadelphia and Boston were the same for both Macs and PCs. A New York search turned up more expensive hotels for Mac users, but only after the first 20 listed. Mac vs. PC
Top hotels measured by booked-room nights by Mac and non-Mac users in selected cities in May: Mac users Las Vegas -- Excalibur Hotel & Casino New York -- Park Central New York Los Angeles -- Hollywood Roosevelt Hotel Miami -- Hyatt Regency Miami Chicago -- Congress Plaza Hotel Non-Mac users Las Vegas -- Stratosphere New York -- Park Central New York Los Angeles -- The Wilshire Hotel Miami -- Miami Beach Resort Chicago -- The Whitehall Hotel Source: Orbitz Other searches showed more significant differences. A Mac search for a hotel in Miami Beach for two nights in July displayed costlier boutique hotels on the first page of results, such as Sagamore, the Art Hotel and the Boulan South Beach, that weren't displayed on the PC's first page. Among hotels appearing in both searches, some pricier options (such as the $212 Eden Roc Renaissance and the $397 Fontainebleau) were listed higher on the Mac. Overall, hotels on the first page of the Mac search were about 11% more expensive than they were on the PC. Similarly, hotels on the first page of results for Baton Rouge, La., appeared in different order for Mac and PC and were 13% more expensive in aggregate for the Mac search. Rival travel sites Expedia Inc., EXPE -3.71% Priceline.com Inc. PCLN -2.30% and Travelocity, which is a unit of Sabre Holdings Corp., don't use a person's computer operating system when suggesting hotels, spokesmen said. Apple declined to comment. Neil Sazant, president of Sagamore, reacted with a mix of admiration and concern to the algorithm. "That's incredible, but I wouldn't want to miss out on PC users," he said. Mr. Sazant says about 15% of rooms at the 93-room hotel are booked through a mix of online sites like Orbitz and that appearing on the first page of results is important in those searches. Orbitz's chief executive, Barney Harford, has made data mining a priority. Shortly after joining the company in 2009, the former Expedia executive opened a small office in Sunnyvale, Calif., and recruited statisticians with backgrounds from eBay Inc. EBAY -2.32% and Google Inc. GOOG -1.89% for a new analytics team. Digging into the data, the team found some hotels were far more likely to be booked by Mac users. Nearly half of bookings on Orbitz for the Public Chicago—a high-end Chicago hotel that boasts features such as "lobby socializing"—come from Mac visitors, said Mr. Liew of Orbitz.
Orbitz found Mac users on average spend $20 to $30 more a night on hotels than their PC counterparts. The Orbitz effort, which is in its early stages, demonstrates how tracking people's online activities can use even seemingly innocuous information—in this case, the fact that customers are visiting Orbitz.com from a Mac—to start predicting their tastes and spending habits. Orbitz executives confirmed that the company is experimenting with showing different hotel offers to Mac and PC visitors, but said the company isn't showing the same room to different users at different prices. They also pointed out that users can opt to rank results by price. Journal Community
Orbitz found Mac users on average spend $20 to $30 more a night on hotels than their PC counterparts, a significant margin given the site's average nightly hotel booking is around $100, chief scientist Wai Gen Yee said. Mac users are 40% more likely to book a four- or five-star hotel than PC users, Mr. Yee said, and when Mac and PC users book the same hotel, Mac users tend to stay in more expensive rooms. "We had the intuition, and we were able to confirm it based on the data," Orbitz Chief Technology Officer Roger Liew said. The sort of targeting undertaken by Orbitz is likely to become more commonplace as online retailers scramble to identify new ways in which people's browsing data can be used to boost online sales. Orbitz lost $37 million in 2011 and its stock has fallen by more than 74% since its 2007 IPO. The effort underscores how retailers are becoming bigger users of so-called predictive analytics, crunching reams of data to guess the future shopping habits of customers. The goal is to tailor offerings to people believed to have the highest "lifetime value" to the retailer. Orbitz first confirmed Mac users' preferences in October and began working them into the complicated mix of factors that determine its search results. The effect isn't always obvious. In tests performed by The Wall Street Journal, search results for hotels in cities including Las Vegas, Orlando, Philadelphia and Boston were the same for both Macs and PCs. A New York search turned up more expensive hotels for Mac users, but only after the first 20 listed. Mac vs. PC
Top hotels measured by booked-room nights by Mac and non-Mac users in selected cities in May: Mac users Las Vegas -- Excalibur Hotel & Casino New York -- Park Central New York Los Angeles -- Hollywood Roosevelt Hotel Miami -- Hyatt Regency Miami Chicago -- Congress Plaza Hotel Non-Mac users Las Vegas -- Stratosphere New York -- Park Central New York Los Angeles -- The Wilshire Hotel Miami -- Miami Beach Resort Chicago -- The Whitehall Hotel Source: Orbitz Other searches showed more significant differences. A Mac search for a hotel in Miami Beach for two nights in July displayed costlier boutique hotels on the first page of results, such as Sagamore, the Art Hotel and the Boulan South Beach, that weren't displayed on the PC's first page. Among hotels appearing in both searches, some pricier options (such as the $212 Eden Roc Renaissance and the $397 Fontainebleau) were listed higher on the Mac. Overall, hotels on the first page of the Mac search were about 11% more expensive than they were on the PC. Similarly, hotels on the first page of results for Baton Rouge, La., appeared in different order for Mac and PC and were 13% more expensive in aggregate for the Mac search. Rival travel sites Expedia Inc., EXPE -3.71% Priceline.com Inc. PCLN -2.30% and Travelocity, which is a unit of Sabre Holdings Corp., don't use a person's computer operating system when suggesting hotels, spokesmen said. Apple declined to comment. Neil Sazant, president of Sagamore, reacted with a mix of admiration and concern to the algorithm. "That's incredible, but I wouldn't want to miss out on PC users," he said. Mr. Sazant says about 15% of rooms at the 93-room hotel are booked through a mix of online sites like Orbitz and that appearing on the first page of results is important in those searches. Orbitz's chief executive, Barney Harford, has made data mining a priority. Shortly after joining the company in 2009, the former Expedia executive opened a small office in Sunnyvale, Calif., and recruited statisticians with backgrounds from eBay Inc. EBAY -2.32% and Google Inc. GOOG -1.89% for a new analytics team. Digging into the data, the team found some hotels were far more likely to be booked by Mac users. Nearly half of bookings on Orbitz for the Public Chicago—a high-end Chicago hotel that boasts features such as "lobby socializing"—come from Mac visitors, said Mr. Liew of Orbitz.
Does linux users get a lower price?
OS discrimination
Well, Orbitz certainly understands its audience. If you're willing to overpay on laptops, hopefully you're also willing to overpay on hotel stays.
Dear Orbitz - I'm done using you.
-Love Your Ex-customer
-Love Your Ex-customer
Good business model. Exploiting the higher disposable income / lower intelligence of mac users for profit is awesome =)
I see you're a new user: this type of comment is, by consensus and executive decree, not welcome on Hacker News. If you don't have something genuinely novel to contribute to the conversation, please do your part to keep the noise low.
I completely disagree with you. An average mac developer who frequents this site is just as intelligent as other developers who frequent this site :)
WRONG - Mac users see higher prices for same hotels than Windows users
RIGHT - Mac users are sometimes also shown hotels that are costlier than their windows users
"...so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see."