I’ve spent more than a decade reviewing and writing about all kinds of software and online tools, and it really gets my goat that companies continue to charge some people more than others. With physical products, the product maker typically sets a retail price and both that company and other retailers who sell it use that price as a starting point. Some might offer deals and discounts, sure, but it’s easy to shop around.
With nonphysical software and services, often the only place to buy the product is directly from the seller. You can’t buy MasterClass or Netflix from anywhere but from MasterClass and Netflix. You might think since there’s only one seller, the price is consistent, but that’s not the case at all.
Why Do Companies Charge Different People Different Prices?
Why do some people pay more than others? The major reasons include A/B price testing, limited-time offers, regional pricing, and grandfather clauses. Are there other reasons? Yes, but I’ll explore these four since they are the biggest ones I’ve seen.
A/B Price Testing
Of all the reasons people get charged different prices, A/B price testing makes me the angriest. A/B price testing means the vendor wants to run a test to find out how much people are willing to pay. The company comes up with a menu of price options and pushes them to people either randomly or selectively based on some criteria. I see it most often in products that hide pricing behind a login page. In other words, you don’t know how much you will pay until you create an account and log in. That way, there may be no public pricing at all and you don’t have a simple point of comparison for the price you’re offered. What’s worse, hiding prices behind a signup page means the vendor is also harvesting some amount of data about you, even if it’s just an email address or phone number you give.
People talk. And when there are price discrepancies, people really talk.
You won’t have any idea if the company is doing A/B price testing, and you won’t know whether you’re getting a low offer or a high one. And while it’s called “A/B” suggesting there are only two choices, that’s not necessarily the case. The vendor might be testing out multiple payment schemes, like a quarterly versus monthly plan in addition to different prices.
Usually, A/B price tests run for a set amount of time. When time runs up, a marketing team can analyze the data to determine how many sales occurred at various prices to compute the odds of the highest profit. Typically, the company sets firmer pricing going forward.
As with physical products, software and services run sales from time to time. However, they may also show limited-time offers to logged-in individuals rather than to the public. It’s incredibly common with weight-loss apps and shows up in other places too, like online newspaper subscriptions. Let’s say your subscription is expiring in one month. The app may prompt you with a limited-time offer to renew at a lower rate. If you ignore that prompt, you might get a better offer in two weeks as the deadline to renew approaches.
While many people are familiar with limited-time pricing (another example is clothing retail sites that add a countdown clock for when the price expires), schemes like these are designed to prey on your psychology. If the deal seems scarce, you’re more likely to jump on it. It’s almost always in your interest to hold out, however. If you miss a deal, you can reach out to customer support and simply ask if they’ll honor the best deal that you saw but missed—more on that later.
Regional pricing is tricky. While I have a hard time standing behind other incongruous pricing techniques, regional prices are usually meant to make software more accessible to people in economically constrained areas. As an example, I’ve seen lower prices for cloud-based business software in Latin America and Southeast Asia compared to what’s charged in the US, UK, and other regions with higher incomes. Max Eddy, who reviews VPN services for PCMag, says he’s seen regional price differences in the length of the subscriptions offered to different customers. Is it “fair?” You can decide for yourself, but I don’t have a problem with it.
The last common reason people might pay different prices for the same software or service has to do with legacy contracts (sometimes also called grandfather clauses). Legacy contracts most often come into play for early signups to brand-new software and services. “Join now as one of our first customers,” they say, “and get locked into a low price.” Occasionally people even get a contract that gives them free subscriptions for life—I just happen to have one myself. Or a customer may continue to receive a tier of service at a good rate for a plan level that’s no longer an option for new customers. It happens because you entered a contract with a company to get a service at a certain price, and if the contract doesn’t have any language saying the company can yank it at any time, then it has to honor the agreement going forward.. .until you end the contract.
And that’s the hitch. If you have a legacy contract that protects the low rate you pay and you decide to change your service, you forfeit the deal. Likewise, you can’t cancel for a few months and resume the service at the previous rate. Once you give it up, it’s over.
How Do You Know If You Pay More Than Other People?
One of the beautiful things about the internet is it allows people from all over the world to communicate with each other. So in a lot of cases, the quickest way to find out how much other people pay for a service is to search for it. People talk. And when there are price discrepancies, people really talk.
When you find posts online indicating people are paying a price lower than you, note the dates they appear. Recent information is better than old. if it turns out you are paying a lower price than others, consider sharing the details, as it could help someone else.
You can also ask friends, family, colleagues, and coworkers if they pay for any of the same services you do and if so how much.
A company’s fear of losing your business can play to your strengths in getting a better price.
Another trick is to turn on a VPN to mask your IP address, open a new browser window in incognito or private mode, open the website for the service you want to check, and see whether the pricing is the same. If you can only see the price when logged into your account, you need to create a new account using a different login. Sometimes this trick works and sometimes it doesn’t. Alternatively, you can ask someone you know to make an account, look at the pricing, and send you screenshots or a summary.
How to Ask for a Better Deal
How do you leverage any information you’ve found? It depends on what it is.
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If you discover pricing that seems to be part of A/B testing, collect the details and write a kindly worded email to customer support. You might say you’re unclear why other people are paying less than you for the same service. Give the team an opportunity to explain and offer you a better deal before you threaten to cancel or mention that a lack of transparency about pricing is eroding your trust in the company.
A company’s fear of losing your business can play to your strengths in getting a better price. It’s not unusual for companies to automatically offer you a better deal the moment you start the cancellation process. If you find that you pay more because you missed a limited-time offer, look for a self-cancellation option in your account. The service will have you verify that you want to cancel at least once, so don’t worry about pressing the button just to see what happens. Sometimes a better deal pops up right away, long before you get to the real “cancel my subscription” page. Alternatively, you could write to customer support to say you never saw the special offer but heard that other people got it, and you would have taken it—could they offer it to you now?
Another option is to simply write to or call customer service and say you’re considering canceling because the product is outside your budget. I wouldn’t recommend going this route unless it’s true. If you’re a student, educator, or work for a nonprofit, mention that fact as well since many software companies offer discounted rates to those groups. I’ve even seen lower rates for small businesses, for example with high-end 3D modeling and graphics software such as Houdini. Special rates might be intentionally hard to find on pricing pages, so it never hurts to ask.
As to regional pricing and grandfather clauses, you can’t take advantage of them unless you happen to meet the criteria. You might read online tips and tricks that say you can use a VPN to make it look like you’re in The Philippines or India and see if you get a regional price offer that way—but I strongly do not recommend it. For one thing, it’s not ethical. For another, depending on where the software or service is hosted, you could have problems accessing it down the line.
I’ve lived in several countries, and from firsthand experience I can say that there are always unforeseen problems with signing up for a service in one place when your bank and perhaps your computer or another account (like an Apple ID) are registered in another country—even when it is ethical. You can’t always predict what will go wrong, but something often does.
Pay a Fair Price
Businesses and developers deserve to make a living from their work, and I’m all in favor of paying a fair price. When the price you pay is inflated compared to what everyone else pays, however, your best course of action is to try and correct it. And if you have to talk to customer support, be kind and considerate. It’ll likely steer you toward a more positive outcome.
For more advice on being careful with your spending, check out these tips for how to get the best price on a phone and a list of the best price comparison apps for shopping.
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