Want to learn how to save money with VPN? You’ve come to the right place! If you’re reading this, you’re probably tired of being on the receiving end of price discrimination. This is a practice where companies charge people different rates based on their location.
Like how booking from a first-world western country gets you expensive hotel rates compared to booking from a less developed country. Or the way Netflix has different types of content for different regions. In some places, providing less content while charging the same price. Doesn’t sound fair, does it?
What you must consider is that these websites are simply going on the information that you’ve inadvertently provided them with. This includes your personal profile’s personal preferences.
Without the use of a VPN to not only change your location but hide your history, you’re an open book.
What is Price Discrimination?
Sellers practice price discrimination based on the premise that buyers from a particular demographic hold a certain perspective of the offered product or service and are thus charged accordingly.
As a result, sellers use this as a tactic to maximize profits by separating markets. This is instead of selling to one, combined market. Now, price discrimination doesn’t always work. Its long-term success depends on the defined target groups staying the same over time, relatively speaking.
What sellers will do to maintain the different pricing tiers is to pretty much keep consumers that belong in the relatively flexible sub-group at a lower price rate. All while keeping prices high for consumers in inelastic submarkets.
How Does It Work?
To practice price discrimination, the companies involved have to identify the specific market segments first, to determine the different price elasticities. Companies typically separate markets based on variables like nature of use, physical distance, and time.
For instance, the Microsoft Office Schools edition varies in price depending on the educational institution that it’s being sold to.
The goal is to avoid market overlap at all costs. Because that way, companies allow consumers in the elastic sub-market who’re able to get the goods at a lower price, to re-sell the product or service at a higher price to consumers in the inelastic submarket.
Because the company has a monopoly on the product being sold, they have the ultimate power to ensure effective discrimination.
Types of Price Discrimination
Price discrimination comes in three different categories; namely, perfect or personal price discrimination, also known as first-degree price discrimination.
Then you have second-degree price discrimination or product versioning, as well as third-degree price discrimination, also known as group pricing.
• 1st Degree
First-degree discrimination is when a business charges the highest possible price for each consumable unit.
Due to the varying price of units, the company manages to capture the economic surplus. First-degree price discrimination is very popular among client service companies because their business model is based on charging a different price for each service or product that they sell.
• 2nd Degree
Second-degree price discrimination is when a company charges a slightly higher price with each different iteration of the product or service, based on the quantity consumed. This applies to bulk purchases and quantity discounts.
• 3rd Degree
This degree of price discrimination refers to the practice of charging each consumer group a different price.
For instance, a movie theater may offer special pricing for students, children, and seniors compared to adults. This is the most common and most accepted form of price discrimination.
How Are You Tracked?
If you’re wondering how companies are able to tell that you’re the one making the purchase or browsing the net, they basically get the data from you. This is especially if you don’t use a VPN like IPVanish.
They use a number of strategies to track your data through third parties as well if they’re not collecting it themselves.
- Cookies: Cookies are a function of your browser that tracks and collects your browsing data in a single location. They can use them to track consumer behavior on different websites. This means that they can link and track your history across different networks. Not only that, but there are also super cookies that companies use to collect all sorts of data on people so that they have it backed up in case you delete your cookies.
- IP Address: An IP address is what makes it possible to track and determine your location and the prices that are displayed for that location.
- Wi-Fi: Websites may also find out your location via Wi-Fi depending on your permission settings.
- GPS: If GPS is turned on in your mobile device then retailers will be able to use that to figure out your location.
To further illustrate how companies use these and other mechanisms, we ran a few thought experiments.
As you can see, we also included knowledge on how to save money with VPN which will simultaneously secure your data and browsing history. Read on for more.
1. Car Rentals
Website: Carrentals.com
Location: New York, New York, JFK Airport (same destination and departure location)
Date: 3 to 10 November 2020
Car: Ford Cougar
Based on 3 different places, we got the following prices:
Ukraine: $416.73
London: $352.85
Los Angeles: $407.39
The most surprising aspect of our research is the fact that using an IP from a poorer country got us the highest price out of the three. We’re used to things being the opposite.
This might have something to do with the fact that the UK server came with free extra features which we were charged for on the other locations.
2. Flight Tickets
Website: Kayak.com
Route: Los Angeles to London
Date: 4-10 November 2020
Class: Coach
Airline: Norwegian Air
Based on five places, we got the following prices:
India: $372
Ukraine: $417
London: $383
Los Angeles: $408
Warsaw: $397
As can be seen here, each location offered a different price range for the same flight, albeit taken from different routes.
There’s reason to believe that if we threw in a few more locations, we would’ve gotten even more price discrepancies.
3. Hotels
Website: Booking.com
Destination: Los Angeles, US
Dates: 10-14 November 2020
Offer: a hotel that was recommended to us
Based on 5 different locations, there are the prices that we got:
London: £508 ($653*)
Los Angeles: $560
*We used Google’s currency converter to convert the currencies
As you can see, we wanted to test server locations in Los Angeles and London. Our findings show a price discrepancy of up to $90 and above for the exact same offer.
4. Online Subscriptions
Website or Service: Apple Music
Plans: Student, Individual, Family
Based on 3 different locations, this is what we found*:
Warsaw: zł9.99 ($2,63), zł19.99 ($5,27), zł29.99 ($7,90)
Germany: €4.99 ($5,64), €9.99 ($11,30), €14.99 ($16,95)
Los Angeles: $4.99, $9.99, $14.99
Website or Service: Microsoft Office
Plan: Home (best value)
Based on 3 different locations, this is what we found:
India: ₹4619 ($64.35*)
London: £79.99 ($102.53*)
Los Angeles: $99.99
As you can see, attempting to buy a Microsoft Office subscription from Britain attracts a higher price compared to customers shopping from different locations. This experiment ended in a price discrepancy of over $35.
Website: The Economist
Subscription: 12 weeks
Based on 4 different locations, we go the following:
India: ₹2900 ($40.42*)
London: £12 ($15,39*)
Los Angeles: $12
Vietnam: $85
As you can see, browsing from Vietnam attracts a 7x more expensive offer.
5. Online Gaming
Website: steampowered.com
Game: Legion TD 2
Based on 3 different locations, this is what we found:
Dallas: $19.99
India: ₹529 ($7,45)
London: £15,49 ($20,29)
Our findings show that browsing from India attracts a much lower price compared to users in the USA and the UK.
Is Price Discrimination Legal?
Price discrimination is legal, unless it’s based on gender, nationality, religion, and race. Or if in contradiction of price-fixing and anti-trust laws.
As long as customers are aware of and allow companies to collect cookies for marketing purposes, it’s considered an ethical practice.
However, there are grey areas, such as if and when companies include lengthy disclosures that customers may not read or understand.
Conclusion
And that’s how you save money with VPN. As you can see, it’s easy to use a VPN to save money in a number of different scenarios.
Now you don’t have to pay exorbitant amounts for the same product on service depending on the location.
Some bonus tips before you sign off:
- Change your server location using your IPVanish VPN which makes the process super easy to follow.
- Regularly clear your cookies and browsing history.
- Always have an incognito and private mode on.
- You can use server switching to benefit from pricing when purchasing just about anything.
- You can also experiment with different dates using the same processes mentioned here.
Comment below and let us know if you’ve ever tried these methods to save money with VPN. We love hearing from you!
