Pricing by far happens to be the most critical element in business. Though we have experiencing differential pricing over the years in different sectors, yet we have become aware of its conspicuous presence only recently. Dynamic pricing is differential pricing, sounding a notch better. Uber brought in Surge Pricing brought it to the mainstream affecting all its users & adding to its fast improving coffers. Demand & supply is no longer is a simple formula, the complexities of which is handled by an algorithm. Software has thus become the core business element from retail to hospitality.
The unit cost plus profit formula seems to have completely lost its relevance. Passing on information is not informed consent. The other reality is the dependability created & its financial exploitation. Though some benefits happen to user on the face of it, the victim is also the user. Quite contrary to the popular expectation the economies of scale does not mean better pricing. Then Walmart should charge the maximum during peak sales.
Creating a creative monopoly& reaping the benefits thereof, is the business model. The Uber model increases prices manifold as per the surge pricing. Demand& supply calculated on pre-mediated tools with no regulations to take care of the user.
The drivers themselves are taken for ride, if we see protests happening all across the globe. Small businesses are allowed to die at the detriment of local communities & users become captive users , so to say.
Price discrimination can be a better term. Amazon.com was caught in this act, showing different prices at the same time for the same item to different customers. This is clear cut violation of Robinson-Patman Act. The company stopped this & apologized. A regulatory regime ought to be put in place. Value based pricing, even with its failings, has to be the core pricing principle.
SURGE PRICING HITS YOU THE MOST WHEN NEED THE SERVICES THE MOST. WHAT AN IRONY!