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My husband and I are big fans of Broadway Theatre. We went to see a show recently and decided to buy tickets for a future performance while we were in town. The last time we did this, the box office saved us the fees typically charged online.
Imagine our surprise when, thanks to dynamic pricing, we actually paid more at the box office.
We were in the city with close friends on Thursday, September 4th, and decided to buy tickets for &Juliet on October 19th. On Sunday, September 7th, out of curiosity, I decided to go online and check the location of the tickets. I was surprised to see that my seat was still available. Not only that, the seat I paid $250.00 for was showing a price of $192.50. Concerned that an error had been made, I called the Stephen Sondheim box office.
The good news: my seat was confirmed. The bad news is that I was told the price we paid was accurate because they use dynamic pricing. Apparently, there was a huge demand on September 4th for tickets on October 19th? I checked, and the 19th is neither a holiday weekend nor close to Thanksgiving and Christmas. The person on the phone told me that the fees on that $192.50 were $15.00, or a total of $207.50 if I had waited until we got home and called.
I paid $42.50 more for the same ticket for the same future date. Would the fees online have been $42.50? Maybe I didn’t check.
This was the time for me to look at the definition of dynamic pricing and find out if it was legal. By definition, “it is the practice of varying the price for a product or service to reflect changing market conditions, in particular the charging of a higher price at a time of greater demand.”. The hotels use it, but tend to show the fees involved. Uber and Lyft use it. That’s more understandable since rush hour creates a high-demand situation.
Is October 19th a day of high demand? How do I find out? Even if I wanted to change the date, Broadway tickets are not exchangeable.
From now on, we will have to jump through hoops to find the best price.
What started as demand-based pricing has turned into a quagmire for consumers and gotten much more complicated.
To answer your question:
If you have purchased an airline ticket at any time in the past decade or more you have.
Dynamic Pricing? Should call it what it really is; greedy opportunistic pricing.
Seems like a solid business model. Perhaps I should move my clients onto dynamic pricing instead of my hourly. I could charge more for writing a media pitch if I was in a time of “greater demand” — maybe the dog really, really needed a walk right then.
What people used to get arrested for in concert, and sports parking lots, along with sidewalks at the theater has somehow become a legitimate business practice for corporate America now.
I believe people used to get arrested for selling pot in some of those same venues (and many others). I’ve seen recent estimates for the US legal marijuana industry ranging from $32-$38 billion in 2024. Time marches on.
I like Wendy’s Pub Burger, and used to enjoy one occasionally. Several years ago they announced a planned change to dynamic pricing to “better serve customers.” They did back off due to pushback. That let me know of their greedy corporate philosophy, and I haven’t patronized them since that time. It is their right to gouge customers, but it is my right to vote with my money.
Jeff, I do the same thing. American Airlines treated my husband and me so badly that I go out of my way (another airport) to avoid them. I find it interesting that, according to Quan’s comment below, they started the whole thing.
“Dynamic Pricing” is better understood as supplier’s pricing based on algorithms. (It does not apply to stock trading, where the market sets the price.) It started with American Airlines back in the 1980s, then it spread to hotel and car rental. With smart phone apps, even a ride on Uber or Waymo, or a Starbuck order carries different prices for different consumers based on locations, time of order, etc.
Consumer acceptance – or backlash – largely depends on perception of fairness. Most consumers will gladly pay extra to snag a box seat or first-class ticket – when supply is truly limited, there is nothing quite like view from a velvet rope. On the other hand, they would resent “price gouging,” however it is defined. Everybody seems to love a sale or martinee prices, but true discount depends on the actual sales at the maximum prices. So-called digital coupons are nothing more than an exchange of personal / behavioral data for a small discount.
Premium credit cards used to offer price protection, but these card benefits have become rare and cardholders must go through cumbersome claims.
It’s the fairness thing that is most acute. I guess most of us accept that we likely paid a different fare from the person in the next seat on the plane and that’s “fair” based on how far we committed in advance. The optionality being something we get used to.
With a concert or a show the product is the same and we have the same view so it feels fairer that prices are equal. And it feels more unfair if we showed commitment early and prices subsequently drop. Even though a showtime is the ultimate distressed good the old world would rather see seats unsold than encouraging “bad” customer behaviour by last minute sniping (I understand lots of venues have backchannels to “seatfiller” operations where people might indeed get a free or nominal cost show on condition of strict non-disclosure). With dynamic pricing that needn’t really happen unless it’s price discovery that the audience simply isn’t big enough.
Isn’t the market price paid for stocks and ETFs dynamic pricing? I invest in both ETFs and Mutual Funds but much prefer Mutual Funds simply to be assured that everyone else who buys or sells the fund on the same day as I do gets the same price. I always get stressed when making an ETF trade.
But at least with an ETF limit order you know your price.
Seems to be a reality in lots of entertainment and travel these days. Buy early to secure a ticket and be hit by whatever the algorithm determines based on current and forecast demand. Hold your nerve and buy later and it might be cheaper (or even higher or sold out).
Pretty much anything Ticketmaster goes near seems vulnerable to this even lower tier sports events (only solution there is to be prepared to pick up single seats and buy at or after kickoff/faceoff time when the secondary stock is dumped by the algorithm as distressed).
At least airline fares generally only seem to go one way. For everyone in N America watch your hotel bookings for next season all around the World Cup – regular hotels in host cities already hitting $500+ per night.
On a hot summertime day many decades ago I was in an amusement park in a long line with my young children for a popular ride. A vendor was selling bottles of cold water to those in line at a multiple of the posted price that allowed you to stay in line and not lose your place.
I did not like demand-based pricing then and I do not like it now. I paid the higher in line price for the water that day. About thirty minutes after purchase while still waiting in line the water had been drunk and my children were needing a restroom break.
Lesson learned.
I think every consumer hates variable pricing because it loads big data against them. On occasion you may win because you’re in early and get to buy at launch price or you hold your nerve/have flexibility and buy very late. But there is no objective way to win without the full dataset of customer behaviours. I guess one should view any price below the average paid is a “win”.
I think that some musical acts with integrity insist on fixed pricing.
Airlines are probably the worst offenders. Recently, my wife and I were thinking of spending Christmas with my father-in-law, who lives in Spain. Before the school break, a fare can be had for under $100. For the next two weeks of the holiday period, it’s $600 minimum, before dropping back to under $100.
What’s the fare on Christmas Day?
One advantage of being retired is the ability to travel when others can’t, but of course, it doesn’t work if you want to visit people during holiday season.
I just had a look, no flights from our local airports on Xmas day but I just noticed the 26th is discounted back down to $200…a sort of bargain!
I suppose you could leave before the break and return on Boxing Day… Surprised there are no flights on Christmas Day.
It’s a moot point now, as my father-in-law has decided to visit Ireland for a cold and probably wet Christmas, lol. I guess a small and lightly populated place like Northern Ireland doesn’t have the demand for flights, only twice-weekly direct flights during the winter season, although it’s different from Dublin.