Dynamic Pricing
“Dynamic Pricing” or “Surge Pricing” is when the price for something rises at high demand times and falls when demand is low.
Can you think of any examples of this?
Does your industry use dynamic pricing?
In the US (and Japan) some cinemas have started using dynamic pricing. At peak times (weekends and Friday night) the tickets are more expensive. On weekdays in the morning and afternoon, tickets are cheaper.
Is this good for customers?
Is this good for their business?
In February 2023 AMC, the biggest US cinema chain announced they’ll charge different prices based on your location in the theatre.
There are 3 price levels; value, standard and preferred
Where do you think each section is?
Do you think this pricing system is a good idea? Who will like it?
preferred = in the centre
value = front row and in corners
standard = at the sides
Most Americans seem to be against the changes but a survey found that 54% of Gen Z ticket buyers and 46% of millennials think dynamic pricing is appropriate.
Only 32% of Gen X respondents and 22% of baby boomers felt the same.
6 months later, AMC stopped using this pricing system. Why?
…their rivals didn’t make the same changes so their tickets seemed cheaper.
Some pubs in the UK are trying dynamic pricing. At peak times, drinks and food will be more expensive.
What changes do they need to make?
How will customers react?
Most customers are furious and are calling peak times “unhappy hour”
Amazon changes prices 2.5 million times a day. The average product’s cost will change every 10 minutes. This has boosted Amazon’s profits by 25%
Some expensive items (like Nikon cameras) can change by $1000 in a few hours
What factors do you think affect Amazon’s prices?
demand and supply
time you’re searching (season or time in the day)
browsing history (google, etc)
previous purchases on Amazon
your location
At peak times (evenings and weekends) goods are often more expensive
If you’ve been googling expensive items or vacation plans, Amazon will set higher prices for you
If you live in a rich area, you’ll probably be offered higher prices
Sometimes if you live in the countryside, they offer you higher prices because there are no nearby shops as rivals
How can you get a good deal?
avoid peak times (evening or weekends)
buy winter goods in the summer
don’t search a product many times (the higher interest raises the price)
use different devices (phone, PC, iPad) to search
use different browsers. Chrome and Firefox will give you different prices on the same product sometimes
don’t let Amazon check your browsing data
delete your cookies - however some retailers offer lower prices to regular customers
or … search for goods on “private mode”
use apps that track prices and send you alerts
sources:
https://money.cnn.com/2017/10/26/media/regal-cinemas-dynamic-pricing/index.html?sr=fbCNN102617regal-cinemas-dynamic-pricing1118AMStory
https://edition.cnn.com/2023/02/06/business/amc-movie-ticket-prices/index.html
https://money.com/dynamic-pricing-amazon-best-buy-walmart/