When was the last time you bought a product using an app on your phone?
Say you have a phone worth ₹40,000 and you’re buying pears from a q-comm platform from a location in Delhi. And say there’s another person with a phone worth ₹16,000 who is, also, buying pears from that q-comm platform from that same location. Would the price on both phones vary?
In December 2024, someone claiming to be an employee of the quick commerce platform Zepto alleged on Reddit that the startup is charging users who use phones worth over ₹30,000 more with customer data being profiled. So, that might mean that the platform could be engaging in dark patterns, which are deceptive design tactics to manipulate users that would benefit the business more than the user. It’s not really unethical, but might make the users sad they’re being manipulated.
Of course, this is still an allegation, but Zee Business decided to check this out and found that there was a huge variations in prices depending on the phone model and user profile. But then again, Zee Business alleged that booking cabs and hotels via Zepto could have variation in prices depending on the phone, which might raise an eyebrow, because Zepto might not have a cab booking or hotel booking feature.
In November 2024, a user on X posted screenshots from the e-commerce platform Flipkart to show price variations of products depending on whether the phone used was an Android or had an iOS system. For instance, the pictures showed that a Mokoboara suitcase was priced at around ₹4100 on an Android, while being priced at around ₹4800 on an iPhone. The user reached out to Flipkart support, which responded that prices may vary because it’s determined by the seller based on various factors, but it might not exactly be a satisfactory response, especially if it’s the same seller selling products differently based on phone systems.
A Belgian newspaper called Dernière Heure, in April 2023, outlined that ride-hailing service platform Uber might be increasing the prices for users if they have low phone batteries, because the need for a cab might be more urgent, then. Well, that might sound a bit nefarious, though Uber has denied any connection between battery levels and pricing, so this will have to be thoroughly tested to verify based on a number of factors.
And Indian Express, in November 2024, has outlined that X and some Google subscriptions might be more affordable on Android smartphones, though, interestingly, it might go the opposite route with LinkedIn Premium, where subscriptions on iPhones may be cheaper than on Androids.
No doubt, getting products to your doorstep quickly and services with a couple of taps may have created more accessibility and evolved consumer expectations, possibly even spoiling us.
So, does that mean they deserve a premium and a decision on who to place that premium on? Is someone’s device a proxy for their purchasing power? Is creating differential pricing based on user data even cool? Some may think, “Hey, it’s 2024. We’re in a data-driven economy, so this is a natural step, because businesses need to figure out innovative ways for maximizing revenue”, but a user, who didn’t even know their details was being used this way, might be a bit miffed. So, should this kind of price discrimination be tolerated?
The rationale that someone using an iPhone wouldn’t be deterred by a marginally higher price might not be totally solid, for an iPhone is a status symbol seen in the public, but higher costs on an app are private and not shown to everyone. So, that trade-off may not be accepted by an iPhone user. Or one might think that having an iPhone might indicate a richer customer, but prudent iPhone marketing may have led to consumers, who are not as affluent, going the EMI route. But, then again, they did decide to buy an iPhone, unless it was gifted.
It’s a sneaky way for startups to prioritize growth metrics to satisfy investors or those pressurizing profitability.
From a business perspective, maybe, this kind of segmentation may be seen as justified. But, could it be more in the short term? Does this disregard the lifetime value of a customer, especially when CAC may be high? Maybe, this is one of the blue pill vs red pill choices for startups to make: work on retaining loyal users or focus on chasing new ones. Because if the news turns out to be true, a loyal user doesn’t just become disgruntled, they could become an active detractor.
If platforms are doing this already, what does the DPDP Act 2023 say about how user data is handled this way?
And a dark pattern might probably be tempting as a shortcut to revenue growth. Because survival is, kind of, hinging on the kind of razor-thin margins that might wake up entrepreneurs in the middle of the night in a cold sweat. Plus, competition’s building and everybody wants to be the platform of choice when users want the best product and the fastest service for the least amount of money.
At the same time, is dynamic pricing a new concept? For instance, do airlines charge different rates based on demand, whether it’s festivity time, when the flight is booked and more? People complain about this, but do airlines get a pass for doing this? Is it fair what they do?
In a parallel universe, what if these startups were to impose a flat rate and raise costs for all consumers? No discounts included. Maybe, that might drive away a price-sensitive consumer and reduce the brand’s revenue. Some might argue this is even noble: by charging premium users more, the platform could maintain lower prices and discounts for the everyday person. It might be the kind of distribution Robin Hood might be proud of.
So, what do you think? As a startup, how would you dictate the prices in a market that might be unforgiving and expecting the best for the least?
