If you look like a million bucks, you might be targeted.
(Photo by Jonathan Mueller)

All of us use stereotypes and other pattern-recognition techniques because our mind needs to take shortcuts; otherwise, we’d be inundated with too much info, enough for us to go insane. And others will use stereotypes on us, whether they are accurate or not. Our demographic data, occupation, habits, and appearance are used by others to quickly speculate and derive additional information about us such as our spending desires and spending potential. And now with each of us leaving a trail of data for marketers to mine and analyse, we leave ourselves open to be discriminated upon financially. Discriminatory practices in pricing have always been in existence, but now they can be even more sophisticated.


An Unusual Money Lesson from my Very First Job:

At age 16, I spent my school holidays at a florist shop (in the States) located across from a cemetery. Candy, the shop owner, regularly employed young faces as she felt that customers (the majority being funeral-related) liked being reminded that life did not just end; it is a renewing cycle. She also believed it was harder for older customers to say no to youths. Let me just mention that the flower shop business is particularly strange because most customers are in extremely emotional states. They are filled with sadness and loss for funerals; joy and excitement for weddings; love and happiness for dates/special occasions; or guilt and remorse for apologies. So to be effective, you had to appeal to their emotions.

Whenever a customer approached the shop, Candy instructed us to look at their attire, their car, and their expression. She said that with 90% accuracy, you can predict what they’re coming in for based on these 3 things. And you can charge them accordingly. When they open the door, we were to match their expression, validate their emotions, and “personalise” a price for them. This shop did not use price tags for items on display. We did, however, have catalogues for larger projects which had prices printed on them. But we had multiple price versions of these catalogues.

The lesson: If you appear “rich”, you are either truly rich or want others to believe you are rich, in which case you won’t mind splurging on stuff to keep up the illusion. If you walked into Candy’s shop and you wore a suit, were perfectly groomed, bore a branded bag, and stepped out of a luxury car, you’d get charge on the higher end of the spectrum or get shown the “big spender” catalogue instead of the “budget-conscious” catalogue.


Another way Your Stuff Spends Your Money

In the last post, we talked about how stuff continues to extract money and resources from our lives. One way that was not mentioned was that the stuff you surround and associate yourself with creates a lifestyle stereotype, and that stereotype influences the way people treat you and how merchants, vendors, and service people charge you (in markets where the prices are not transparent). How much does that handyman repair cost? How much is the consultancy service, web design, travel package, or legal service? What is the price of that antique or flea market item? What about all the groceries and products at the wet markets? Or negotiating the really big ticket items like homes and cars and weddings? Perhaps the answers to these questions depend, in part, on what stereotypes and profiles others put you in.


Differential & Discriminatory Pricing

Price discrimination has existed for a very long time, and while you cannot change your gender (at least not easily), age, size, citizenship, or race, you can change how “rich” you appear. Walk into any spa with a Chanel bag and I guarantee you that all the staff there will be thinking, “this person can afford our most expensive package, so we should definitely push for it”.

The absolute crazy thing now is that there are companies that use your data to more accurately discriminate their pricing. As early as 2000, Amazon was reported to have experimented with this tactic of charging different people different prices on the exact same product. Today, even more companies are doing it.

Based on your demographics and past purchases, it’s easy to create a “profile” of your price tolerances and ability to purchase. This is why I will never answer “personal income” or “household income” survey questions; instead I always tick the box “prefer not to say”. And because I’m associated with Frugal in Singapore, Google has already profiled me as a tightwad. Let’s hope it has done the same for you, since who wants to be charged more for the exact same item?

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