Dynamic pricing: Difference between revisions
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'''Dynamic pricing''' is an umbrella term, which refers to a pricing strategy of modifying the price of a product or service according to market demands and/or consumer-identifying information. This definition includes '''surge pricing''', '''surveillance pricing''', '''demand pricing''', '''time-based''' '''pricing''' and '''variable pricing'''. | '''{{Wplink|Dynamic pricing}}''' is an umbrella term, which refers to a pricing strategy of modifying the price of a product or service according to market demands and/or consumer-identifying information. This definition includes '''surge pricing''', '''surveillance pricing''', '''demand pricing''', '''time-based''' '''pricing''' and '''variable pricing'''. | ||
==How it works== | ==How it works== | ||
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====Perceived fairness==== | ====Perceived fairness==== | ||
In 2016, a behavioral scientist that works at Uber made clear that the company could prove that people that people are willing to pay more when their phone batteries were low. Uber claimed they “absolutely don’t use that” information, but it not legally prohibited, so consumers have to take their word for it.<ref>{{Cite web |last=Mahdawi |first=Arwa |date=13 Apr 2018 |title=Is your friend getting a cheaper Uber fare than you are? |url=https://www.theguardian.com/commentisfree/2018/apr/13/uber-lyft-prices-personalized-data |url-status=live |archive-url=https://web.archive.org/web/20260312173357/https://www.theguardian.com/commentisfree/2018/apr/13/uber-lyft-prices-personalized-data |archive-date=12 Mar 2026 |access-date=26 Mar 2026 |website=The Guardian}}</ref><ref name=":2" /> Price discrimination concerns have also been publicly remediated by claiming the usage of a practice known as "[[steering]]" instead. Steering is dynamically showing more expensive ''options'' based on individual consumer's characteristics, such as being a Mac user.<ref>{{Cite web |last=Kingsley-Hughes |first=Adrian |date=27 Jun 2012 |title=Mac Users Have Money to Spare, Says Orbitz |url=https://www.forbes.com/sites/adriankingsleyhughes/2012/06/26/mac-users-have-money-to-spare-says-orbitz/ |url-status=live |archive-url=https://web.archive.org/web/20250603093545/https://www.forbes.com/sites/adriankingsleyhughes/2012/06/26/mac-users-have-money-to-spare-says-orbitz/ |archive-date=3 Jun 2025 |access-date=26 Mar 2026 |website=Forbes}}</ref> | In 2016, a behavioral scientist that works at Uber made clear that the company could prove that people that people are willing to pay more when their phone batteries were low. Uber claimed they “absolutely don’t use that” information, but it's not legally prohibited, so consumers have to take their word for it.<ref>{{Cite web |last=Mahdawi |first=Arwa |date=13 Apr 2018 |title=Is your friend getting a cheaper Uber fare than you are? |url=https://www.theguardian.com/commentisfree/2018/apr/13/uber-lyft-prices-personalized-data |url-status=live |archive-url=https://web.archive.org/web/20260312173357/https://www.theguardian.com/commentisfree/2018/apr/13/uber-lyft-prices-personalized-data |archive-date=12 Mar 2026 |access-date=26 Mar 2026 |website=The Guardian}}</ref><ref name=":2" /> Price discrimination concerns have also been publicly remediated by claiming the usage of a practice known as "[[steering]]" instead. Steering is dynamically showing more expensive ''options'' based on individual consumer's characteristics, such as being a Mac user.<ref>{{Cite web |last=Kingsley-Hughes |first=Adrian |date=27 Jun 2012 |title=Mac Users Have Money to Spare, Says Orbitz |url=https://www.forbes.com/sites/adriankingsleyhughes/2012/06/26/mac-users-have-money-to-spare-says-orbitz/ |url-status=live |archive-url=https://web.archive.org/web/20250603093545/https://www.forbes.com/sites/adriankingsleyhughes/2012/06/26/mac-users-have-money-to-spare-says-orbitz/ |archive-date=3 Jun 2025 |access-date=26 Mar 2026 |website=Forbes}}</ref> | ||
Not being able to objectively compare prices restricts a consumer's ability to perceive fair pricing. The ability to plan future purchases is also limited, because prices change constantly. From a consumer perspective, the unfavorable aspects algorithmic pricing can outweigh the ability to search and compare online that enables more choices.<ref name=":0" /> | Not being able to objectively compare prices restricts a consumer's ability to perceive fair pricing. The ability to plan future purchases is also limited, because prices change constantly. From a consumer perspective, the unfavorable aspects algorithmic pricing can outweigh the ability to search and compare online that enables more choices.<ref name=":0" /> | ||
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==Examples== | ==Examples== | ||
{{ | *[[Wendy's]] introducing dynamic pricing in 2025 for "getting more breakfast customers in".<ref>{{Cite web|url=https://www.npr.org/2024/02/28/1234412431/wendys-dynamic-surge-pricing|title=No, Wendy's says it isn't planning to introduce surge pricing|work=NPR|date=2024-02-28|first=Joe|last=Hernandez}}</ref> | ||
==References== | ==References== | ||
{{reflist}} | {{reflist}} | ||
==See also== | |||
*[[Value based pricing]] | |||
[[Category:Common terms]] | [[Category:Common terms]] | ||