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Tinder’s pricing algorithm can charge users up to 5x more for same service

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Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#41

Post by briga »

Beaver117 wrote: post #3

Of course, also Tinder's profit is directly dependant on you not finding a partner, so you continue to use their service.

This is really apparent in their “Top Picks” feature. They give you a list of people the algorithm thinks you will like, but you’re only allowed to check out one of them in free mode. Even though apparently these people are a great match for you they do not show up in the course of regular swiping. Which makes it obvious that Tinder is keeping a holdout set of people it thinks you are compatible with and never shows them to you. Using that app is akin to using a slot machine, and I suspect the algorithms they use for doling out rewards are very similar.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#42

Post by 8f2ab37a-ed6c »

anonporridge wrote: post #36
8f2ab37a-ed6c wrote: post #32

Earlier quoted context omitted.

I'm actually surprised that dating apps aren't doing more with monetization opportunities. There are plenty of whales out there who would be happy to deploy their disposable income for mating opportunities. Why not let someone spend $1000 a day to be the top displayed profile in a city for an entire day?

Those people aren't using Tinder. There are "dating" sites that specialize in connecting wealthy/successful people (mostly older men) with young, beautiful people (mostly women). They do charge quite a bit and make bank.

I'm not an expert at that particular area, but my anecdotal impression was that high-end matchmaking services (say 50-100k to find a life partner) were fairly underwhelming. Or are you talking about the whole sugar dating world here?

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#43

Post by bananamerica »

thanhhaimai wrote: post #8

Not a Tinder user or investor, but this makes me curious. Why is it okay for insurance companies to sell me products with hyper-personalized pricing (often based on sex, age, and race), but it's not okay for Tinder or other tech companies to do so?

Insurance price varies according to how likely you are to use their services, and how expensive these services are likely to be. A 95-year-old with high blood pressure and a history of cancer is potentially more expensive than a healthy 25-year-old. That's entirely different from how an app like Tinder operates.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#44

Post by barry-cotter »

hda2 wrote: post #20
thanhhaimai wrote: post #8

Not a Tinder user or investor, but this makes me curious. Why is it okay for insurance companies to sell me products with hyper-personalized pricing (often based on sex, age, and race), but it's not okay for Tinder or other tech companies to do so?

Because sex, age, and race are statistically significant factors in how much the insurance companies will pay out for each demographic. Personalized pricing for a digital service with a more-or-less constant cost-per-user doesn't make sense here (unless you want to maximize profits by unfairly discriminating against certain demographics).

What’s this “unfair” crap? We’re talking about dating and mating. Apart from war there may be no human activity in which fairness applies less. Price discrimination in dating apps is as problematic as in airline tickets. Twenty year old men moan about actually having to try and ask people out if they want a date. Thirty five year old women complain that they can’t find someone who loves them for their career accomplishments or how superficial men their age are, dating women 10 years hone younger. Dating sucks unless you’re a young woman looking for casual sex or an attractive, solvent (young) man who wants to get married.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#45

Post by kelseyfrog »

thanhhaimai wrote: post #8

Not a Tinder user or investor, but this makes me curious. Why is it okay for insurance companies to sell me products with hyper-personalized pricing (often based on sex, age, and race), but it's not okay for Tinder or other tech companies to do so?

If you think about it, it's kind of weird for a product to have a single price. Everyone who would pay more is paying less.[1] It's much more profitable to just barely meet demand for every one while keeping the lower bound at the cost of production. You're right to point out that insurance operates with price discrimination. Student discounts and senior discounts are another common example. There are many others.[2] Tinder has market power in the sense that they sell access to a unique user base. Sure, their competitors offer access too, but none are identical, and that difference implies an amount of exclusivity.

1. Consumer surplus

2. https://www.economicshelp.org/blog/7042/economics/examples-o...

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#47

Post by kelseyfrog »

car_analogy wrote: post #10
8f2ab37a-ed6c wrote: post #6

Disclaimer: I think Tinder is a rent-extracting garbage app, BUT, philosophically speaking, why is dynamic pricing unfair? If the algorithm detects that based on your biography, location and usage patterns, you would keep using this service even if it charged you 5x as much, isn't that just the market becoming more efficient?

> market becoming more efficient You mean a company becoming more efficient at extracting money from their un-informed customers. A company finding new ways to leverage their market power, position, and information asymmetry.

Enterprise B2B sales where contracted prices are never disclosed immediately springs to mind. It's the pinnacle of price discrimination.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#48

Post by cheschire »

t-writescode wrote: post #7
moneywoes wrote: post #5

Does paying for plus even make a difference?

You get to see people who have "liked" you, so you can like them back directly. For guys, who generally get *nowhere near* the number of likes as women, this can help them find people that actually want to meet them. Or, they could use one of those automated finger-swiping things, like some guys tend to do.

You mean a hotdog on a low speed drill?

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#49

Post by kelseyfrog »

robbedpeter wrote: post #39
8f2ab37a-ed6c wrote: post #13

Earlier quoted context omitted.

Why is that bad? That's how free markets work. Note, the post this is a reply to originally said "You mean a company becoming more efficient at extracting money from customers".

Products aren't priced based on value, but on the maximum a customer will pay. A free market identifies the value of a product through competition between different sellers of the product. Tinder is entitled to charge as much as they want to whoever they want as long as they're not discriminating against a protected class. The free market resolution requires competition, though. There might be a reasonable case to be…

> There might be a reasonable case to be made that products that don't have comparable competition can't be priced in a way that exploits different customers by charging more for receiving the same service or good?

Price discrimination[1] relies on market power. This is a completely uncontroversial thing. Any discussion on price discrimination will tie back to market power.

1. Not a judgement here. This is a technical term from microeconomics.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#50

Post by cmdli »

thanhhaimai wrote: post #8

Not a Tinder user or investor, but this makes me curious. Why is it okay for insurance companies to sell me products with hyper-personalized pricing (often based on sex, age, and race), but it's not okay for Tinder or other tech companies to do so?

Insurance is often highly regulated as to what they can do price discrimination on, oftentimes limited to things which directly impacts the cost of that insurance, like age (side note, I don't believe race is legally part of that). Tinder, on the other hand, presumably doesn't have any differing costs per customer and has no generally agreed-upon guidelines as to what kind of discrimination is okay.
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