How do you feel about dynamic pricing which is when prices go up as demand increases?

I would be ok with surge pricing, if the workers get more too.

It’s called capitalism. Personally, for individual things like a concert it should be one price. But just like with consumables, if the market can support it, more power to them.

Another example is what Uber does.

Some may call it price gouging, an economist might call it the Law of Supply and Demand. I guess if they do it and the consumer doesn’t like it, the consumer always has the choice not to comply, which will result in a loss for the service provider. Then they’ll have to change up their tactis, or not if they’re successful with it.

I agree with you, @janbb. I think it’s stinky, too, no matter how justifiable some others feel it is. It is rarely used for much smaller businesses, who would, IMO, be more deserving. The airline is sending that aircraft to that destination no matter how full the flight, the concert venue is covered for security and cleaning no matter how many people show (and incentivizing customers should be about lowering, not raising prices).

I get that that is how it works, but I think it’s a cheap trick.

Do not be fooled. “Dynamic pricing” is just a new euphemism for the age old practice of price gouging.

I don’t like it when it is extreme, and sometimes it is extreme.

Young families controlled by the school year pay more for travel. People who have to eat lunch at “lunchtime” might have to pay more. Just seems like the companies take advantage a little too much.

There was a recent case brought by the DOJ against American Airline about price fixing that the airline lost.

Also, watch this interview with the FTC chair. The US government does look at this sort of thing, but not enough. https://youtu.be/oaDTiWaYfcM?si=R2mU3ZziS2W6Sr3e

It feels good when prices go down when demand decreases. If they were smart they’d have regular pricing + discount pricing only.

The problem with it is the lack of information. When information is as perfect as possible, dynamic pricing works well as a representative of the supply curve. But when information is scarce, it disrupts the buyer’s choice.

Various bridge and highway tolls charge different rates depending on time of day. that works well n that the commuter knows ahead of time how to decide. But companies like Uber and Lyft have imperfect information for the consumer, and one cannot evaluate the cost efficiently.

I was at dinner in Manhattan one time, and three of the people in our party were taking Ubers to different places (so they could not share). The Frits one got an Uber for $8; the second for $10; the third was $27 because of “surge pricing”. The third person ended up riding with the first and then walking to his own hotel.

@janbb I would complain that the price of the ticket changed after you started the process.

The problem isn’t the pricing scheme, which is, obviously, targeted gouging, among other things. The problem is that they do this and you don’t have a choice. It’s the definition of monopolistic practices and eventually the government will rightly crush them all, though too slowly to save the sad sods.

Hotels, too, will often charge more for weekend nights than for week nights.

@jca2 That’s a different thing than dynamic pricing though. You know what the price will be even if it is higher on weekends. This is quoting one price and than changing it the next time someone looks at the event.

Gotcha, @janbb.

One general problem with capitalism (among many many many problems) is that resources are distributed based on affordability, rather than anything related to need.

Price surging (and price gouging) exacerbates that particular problem in some circumstances.

It is also just annoying to paying people and is probably counter-productive from a marketing and public relations point. It’s taking short-term profit for a longer term loss in good-will, which may or may not be a good business decision.

For businesses with a strong market dominance, who either have a monopoly or something close to it, they can probably get away with pissing people off with these sorts of anti-consumer practices.

Supply and Demand

I get it with Uber. If there are lots of requests in one area raising the price encourages drivers from other areas to go there and even out the demand. It also encourages people to think about delaying their trip if it’s not urgent til the price goes down. That makes sense.
For a concert I’m less convinced particularly when it discourages legitimate purchases and leaves more for the touts. It doesn’t solve a problem it’s just to make money.

“Another brick, in the wall.”

In parking, dynamic pricing is used to reduce congestion. The target is 85% of spaces in use on any given block; if more than that are consistently used, prices are raised, encouraging more affordable parking in less utilized areas. Those less popular areas have their price reduced.

San Francisco has done an extensive study and found that dynamic pricing has not only reduced fuel use and air pollution (by reducing the “cruising” around and around the block, waiting for something to open up), but also reduced traffic accidents and pedestrian injuries (less reckless driving).

@syz But are the higher rate areas known or do the prices change so that the parker doesn’t know? In my city, the blocks near the beach or on the shopping street are labeled a certain zone and that hourly rate is higher consistently than blocks further away. I don’t consider that dynamic pricing. To me, dynamic pricing changes arbitrarily depending on demand not in a transparent pattern.

It is another example of the imbalance of power between citizens and faceless corporations. It would be OK if dynamic pricing meant costs came down when demand was low but we have no certainty that this will happen in any equitable manner.

My worry is that this imbalance of power is only going to get worse as companies increasingly use AI to maximise their profits with the poor getting poorer while the rich become astronomically wealthy.