Digital innovation is disrupting a lot of different industries. One of the most discussed and successful is the sharing economy. Companies like Uber and AirBnB are changing the way consumers travel. They’re giving us more options, greater flexibility, and incorporating easy-to-use digital technology into the palm of our hands. Even with all of their success, there is still debate over their dynamic pricing strategy. Is it fair for consumers? Dynamic pricing certainly isn’t anything new. Airlines have followed this strategy for decades. So why are consumers up-in-arms about it? This question is probably one of the main reasons why we don’t see much dynamic pricing. It tends to have a psychological effect, leaving consumers frustrated, and often looking for other options.
Dynamic pricing isn’t always the “bad guy”, however. Contrary to this belief, it can also be in used for a consumers best interest. For example, the Drink Exchange is transforming the way we purchase drinks at bar. With a “buy-low” approach, it makes patrons really think about their selection, giving way for other drinks, just to save a buck or two. At the same time, the Drink Exchange created a fun environment, promoting a “game-like” approach.
Seeing examples from both sides of the spectrum, with legitimate arguments for each, makes it difficult to accept that one is right, and the other is wrong. The key determining factor is “flexibility”. Flexibility is what we use to differentiate the true economic value of a product or service. Since each consumer values a product/service differently, we need to be aware of the next best alternative (if there is one), as well as the pricing associated with that alternative. If we see another option, are we willing to be flexible to make the change? These are questions that consumers and organizations need to be aware of.
Dynamic pricing models certainly will not fit into every business model. Conscience decisions need to be made, and a holistic, systems-approach should be used to evaluate the market prior to taking effect. With that said, I am in favor of this approach, if fits the market. And as someone who can be flexible, I can accept this model as consumer as well.