Often, the best way to avoid a rip-off is to know what others are paying for things. What did the guy sitting next to me on the plane pay for his ticket? How much did the neighbor pay for his kid's wedding? That emergency dental procedure? The water pump replacement on her late-model foreign car?
Retailers use big data to maximize revenue—that is, to take as much of your money as they can. Why shouldn't you have the same power?
Increasingly, websites and apps are giving consumers access to incredibly detailed aggregate price information, holding out the promise that the scales of bargaining power might tip back their way. There are now hundreds of online tools—most of them unbiased and data driven—that tell consumers the prices others have paid for everything from flowers to bathroom renovations. Enter a ZIP code, select a few criteria and faster than a shopkeeper can say, "High profit margin," you can say, "Not so fast!"
The price calculators—many are called "cost estimators"—are fun to play with, but they pack a real punch. None of these tools will prevent a bait-and-switch estimate, or keep you from getting nickel-and-dimed. But they do something just as important: They give you a reference point (what economists call an anchor) so you always know you are in the right ballpark, if not sitting in the right seat, when paying for something.
I'll divide the tools into three categories: Regret tools, bargaining tools and anxiety tools. Let me explain.
Data are always backward looking, and as we all know, the past is no guarantee of future performance. So it is with prices others paid. This is most obvious in airline tickets, where knowing your friend got a good deal on a flight to Ireland last week is almost useless as a predictor of your price, other than the near certainty that you will pay more.
Still, longer trends offer some insights, and that's what I love about FlightAware's beta product, "Insight for Airlines." FlightAware is known for giving passengers and their loved ones up-to-the-moment geographic and speed data on planes in the air.
But click around, and you'll find the Insight product, which tells users the median price paid for tickets on that route, by airline, during a 12-month period. It also includes the maximum and minimum prices for that route. If you're on the plane, you'll either feel smart or stupid, based on what you paid.
Flightaware's director of software development, Jeffrey Lawson, notes that the data tool comes with a long list of qualifiers. For starters, the data, which are acquired from the airline industry, is about two years old. Second, it's not fair to compare cost of a ticket purchased the day before a flight with a ticket purchased 11 months prior to the trip. It's not even fair to compare a February ticket to a May ticket.
But, if you fly a route frequently—say, Seattle to New York—you get a good idea if you are overpaying regularly. Insight also makes it easy to compare airlines, which is particularly useful. For example, on a Seattle to Newark run, United carries the most passengers, but Alaska charges about 10 percent less. Scheduling concerns aside, it sure looks like some of those United passengers should consider Alaska.
Lawson, by the way, says FlightAware is considering an update to the product, which would be a boon to travelers. But since you can't use the FlightAware's data to bargain for lower fares, it's mostly a "regret tool," as in, "Wow, I'm kind of a sucker for paying that much."
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I'd put wedding cost calculators into the same category. One of the best I found is at CostOfWedding.com. It allows lovebirds to enter all kinds of specifics, such as what kind of table gifts they expect to buy, and how fancy the reception food will be.
Still, weddings involve so many details and decisions that wedding calculators are really only useful for after-the-fact comparisons. For example, CostOfWedding.com says a 75-person affair in suburban Washington should cost $21,700. That won't save you money if you are planning an event there, but it probably will make you feel good or bad if you've done so recently.
Another regret tool is the "Location Affordability Portal," released in the past week by the U.S. Department of Transportation. It's supposed to help homebuyers more accurately predict the real costs of moving by adding in transportation costs—in other words, that "drive until you qualify" home in the exurbs might not be as much of a bargain as it seems, once you add in the price of gas.
The tool is very hard to use, however, and requires a lot of specialized inputs from users. At the moment, it's more useful to inspire "what might have been" daydreaming.