In today’s world, surge pricing, also known as dynamic pricing, has become a common tool used by companies to adjust prices based on demand. This strategy, often used by companies such as Uber and airlines, allows them to increase prices during peak times and decrease them during off-peak times. However, customers are not always happy about surge pricing, as it can make products and services more expensive when they are needed the most. For example, Wendy’s faced backlash when it announced plans to implement surge pricing for dinner rush hours.
JetBlue recently implemented dynamic pricing for checked bags, leading to outrage from customers. While some argue that dynamic pricing is a fair way for companies to adjust prices based on demand, others perceive it as a scam. It is important for companies to be transparent about their pricing strategies and clearly communicate the benefits to customers. Marco Bertini, a professor of marketing, believes that dynamic pricing is not inherently unfair, as long as it is not perceived as profiteering.
Despite the potential benefits of dynamic pricing, some businesses fail to effectively communicate the strategy to customers. Transparency is key in ensuring that customers understand why prices are adjusted and how they ultimately benefit from the pricing model. Bertini advises companies to frame dynamic pricing in a way that highlights the long-term benefits for both the company and the customers. This can help alleviate concerns of unfairness and build trust with customers.
While static pricing may seem like a fairer option, Bertini argues that it is not always practical, especially in industries with tight margins like commercial aviation. Dynamic pricing allows airlines to adjust prices based on customers’ willingness to pay, ensuring the industry remains competitive. However, Bertini acknowledges that some companies may go overboard with dynamic pricing, leading to customer dissatisfaction. Despite its flaws, dynamic pricing is essential for industries like aviation to survive and remain profitable.
In conclusion, surge pricing, or dynamic pricing, is a strategy that allows companies to adjust prices based on demand. While some customers may perceive it as unfair, transparency is key in ensuring that customers understand the long-term benefits of dynamic pricing. Marco Bertini believes that dynamic pricing is not inherently unfair, as long as it is not seen as profiteering. Companies must effectively communicate their pricing strategies to build trust and maintain customer satisfaction. Despite its flaws, dynamic pricing is crucial for industries like commercial aviation to remain competitive and profitable.
