Priceline.com Price Massage Trick

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I was just trying to book a car rental for an upcoming trip and I thought I’d try Priceline.com since I’ve never used them before.

If you’re unfamiliar with them, they are a bit different in that they allow you to set your own price for your flight, hotel or car rental and then they approach the various companies and see who [if anyone at all] wants to offer you the service at your price. Essentially it is a reverse auction system [one buyer and many sellers].

I had already looked at the major car rental sites and the best price I could find was about $25 a day for the car and dates that I wanted. So I went to Priceline.com and filled in my info. At the bottom of the page it asks you to name your price:

I thought I’d go for it and ask for a 20% discount so I entered in $20. The next screen was this:

That made sense…I guess I was being a bit greedy, so I decided to see if it would go for $21 a day:

Yippee! That’s not bad…just enter my credit card and wait for one of the car rental companies to accept my bid. Well, since I’m a computer guy and I understand how these systems work and since I’m a business guy and I understand how the psychology of money works, I couldn’t help trying a little experiment before I booked the car.

I hit the browser’s back button and went back the “Name your own price” screen [the first image] and this time I entered $15. As expected it told me that $15 was too low and that none of the companies would bid on it because it was so far below the currently available rates.

Here’s where my hunch paid off. If I went by all the information that the system had given me so far, I would expect that the lowest price it would accept would be $21, right? Well did they really lookup and check the current rate [a lot of work behind the scenes], or were they just trying to massage an extra couple bucks out of every Priceline customer?

I couldn’t resist trying $16 as my price:

Mmmmm. $20 is too low and $16 is okay?

Interesting game. I can understand why Priceline is doing this kind of thing. They know that everyone will purposely enter a lowball bid just to see if it is accepted. Probably dealing with these low bids costs them money and is generally annoying.

BUT, it’s never a good idea to lie to your customers! If you are telling them that you’re checking the currently available rates, you’d better mean it.

I have no idea how many transactions Priceline.com has done since they have used this trick but you can see that over a couple years this technique [it would have cost me an extra $28] could have accounted for a pretty big dollar amount being extracted unfairly from their customers. Of course the flip side is that a larger amount was made for Priceline.com their affiliates, so if you’re a Priceline shareholder, then maybe this is a good practice.
Lies are never worth it. What do you think, good business strategy or does it get your blood boiling?

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