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Now Prices Can Change From Minute to Minute

Thursday, December 17, 2015   (0 Comments)

Wall Street Journal (12/13/15) Nicas, Jack

More businesses are deploying dynamic pricing systems, which can change event ticketing and other admission costs on a daily, hourly, or minute-to-minute basis by tapping vast volumes of data and powerful software. Companies are using tickets already sold to adjust the price of advance-sale tickets each day, and economists report consumers are paying more as a consequence. In addition, dynamic pricing tends to favor those willing to pay the most for goods in highest demand. Although companies have long used prices to smooth out demand, before online transactions enabled them to amass more data on customers' purchase habits and rivals' prices, such shifts were rare and based on intuition. Now continuous price adjustment based on various factors is almost the norm. More recently, bands, sports teams, and SeaWorld Entertainment have started revising prices according to demand, and this movement is helping businesses charge more for in-demand items and offload surplus goods. For example, the Caberfae Peaks ski resort in Michigan estimates its revenue for each customer has climbed 17.6 percent in the five years since it deployed dynamic pricing for advance-sale tickets. The University of Pennsylvania's Peter Fader says consumers' resistance to dynamic pricing upon its introduction quickly subsides as they get used to it; he cites as an example the backlash Major League baseball teams encountered when they first set up dynamic pricing, but now the practice is routine with few if any consumer grievances.


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