Dynamic Pricing – a grand rip-off or a consumer bonanza?

Coca Cola has tested Vending machines that modify the price based on the outside temperature.

Uber pricing now changes based on the supply of, and demand for cars.

The Pro Sports franchises raise ticket prices if the visiting team is in-demand.

The brunt of the population has grown up with fixed pricing being the norm.  Discounts were common, but fluctuating pricing was frowned upon.

The internet has initiated a dramatic re-education on the nature of what you ‘charge’ or ‘pay’ for an item.  Other, more dynamic methods of pricing items for sale, have been introduced.  eBay has educated everyone about how auctions can help them personally make money;  Groupon introduced the public to how the ‘group’ can influence pricing.  These last two examples are arguably positive dynamic pricing changes.

Hotel and Flight booking engines set an initial price for a trip that appears fixed.  However if you leave your computer for a while (i.e. you check with the wife on whether the weekend trip is a go…) and then return and re-do the price – it has inevitably gone up (Tip: clear your cookies or use your work computer the next day before you redo the search. You will find the old price comes back in many cases).  This hidden dynamic pricing strategy is not so positive for consumers.

The risk by brands using dynamic pricing is that buyer’s will discover real and obvious trickery in the pricing.  If the buyer feels ripped off as a result of dynamic pricing algorithms and rules deciding his price should be higher than someone else in the same position, goodwill is certainly lost.

There are positives and negatives to dynamic pricing.  But it is not going anywhere.  How dynamic pricing can be used by your business to maximize revenue and not hurt your client relationships is one of the new paradigms for 2017.

If you know any interesting examples of dynamic pricing (good or bad), please send them along.

Sources:

Uber: http://www.idrivewithuber.com/riders/uber-basics/what-is-uber-surge-pricing/

https://newsroom.uber.com/guest-post-a-deeper-look-at-ubers-dynamic-pricing-model/

Pro Sports Franchises: http://www.investopedia.com/financial-edge/1012/why-the-prices-of-sports-tickets-vary-so-much-.aspx

http://www.crainsdetroit.com/article/20140302/BLOG003/140309989/dynamic-ticket-pricing-means-stadium-seat-prices-are-adjusted-up-or

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