With a big boost from technology, prices are becoming increasingly fluid.
With a big boost from technology, prices are becoming increasingly fluid: picture a printed price tag being replaced by a digital read-out that changes based on time of day, competitors’ pricing, shifting demand, the person looking at it or various other factors. Airlines and hotels have long charged wildly different prices for the same seat or room, a practice that’s quickly shifting into a range of other categories.
Many vendors on Amazon and other e-commerce sites rely on pricing software to constantly adjust the cost of everything from electronics and apparel to jewelry and household staples, The Wall Street Journal reported this week (on Amazon, the lowest-priced product gets a retailer into the default “buy box”). “In the age of the Internet, fixed prices are a thing of the past,” the co-founder of Decide.com told the Journal. It’s not just e-commerce goods. Last month The New York Times reported that some grocers are starting to use data from loyalty cards to personalize pricing based on the customer in question.
In the dining category, variable pricing can be achieved through mobile apps, as The New York Times noted this week. Savored offers lower prices for off-peak dining hours (and by the same token, restaurants can hike prices at popular times); Leloca offers “instant nearby deals,” allowing restaurants to quickly issue an offer when faced with cancellations or an unusually quiet night. Adjusting prices based on fluctuating demand is a concept that translates widely: parking spaces, movies, even baseball games. Bernstein Research analyst Todd Juenger estimated that The Hunger Games could have grossed an extra $30 million worldwide on its opening weekend if prices had been upped in expectation of high demand.
With the middle market getting squeezed, we’ll see this practice pick up steam as brands cater in different ways to the spenders and the savers.