Of course every company and industry wants to price services this way, but few are able to. Why is that? There are two different ways that I'm thinking about t

Of course every company and industry wants to price services this way, but few are able to. Why is that? There are two different ways that I'm thinking about this. Monopolistic Power: The ability to price a product/service based on a customer's willingness to pay and not the product's cost is the key sign of a company's monopolistic power. Most companies and industries do not have the privilege of pricing this way. But a select few can charge customers their maximum willingness to pay, and reap huge rewards. Think Google's ad bidding model. People who have been saying that Uber, Lyft and other rideshare companies are perfect substitutes might have an issue explaining this monopolistic power. The high-competition model for the rideshare industry would mean rides are priced on cost, not on value. Allocation of Fixed, Perishable Inventory: Some industries, for example airlines and hotels, have ~100% fixed, perishable inventory. A hotel room at the Hilton in Chicago has different for every night, and it's impossible to sell a room for a date in the past. It's also very hard for them to grow or shrink their airline seats/hotel rooms for a given period of demand. Similarly, when an Uber driver is looking for work and an Uber customer is looking for a ride - the Uber driver is in a specific place at a specific time, and the Uber customer's demand is for a ride at that given time from that given place. If the price isn't satisfactory for both parties, the ride doesn't occur, and both lose out. Even if there were 100 ride companies with intense competition, you could imagine the pricing changing based on perceived value. Airlines have immense competition (and historically limited profits), but still price based on value. Also worth noting, Uber not only can charge customers value-based pricing, but can also estimate the driver's willingness to work for a given price, and pay based on that amount.