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When surge pricing hits, your wallet takes a thrashing
- rolph 3y agoits a bad idea, as in this is how you get someone defecating in your lobby and throwing it on the grill.
- superkuh 3y agoThe real word for this is "profiteering".
- randomdata 3y agoHistorically, in the restaurant business it was called "happy hour". Funny how choice of words changes the narrative.
- deleted 3y ago[deleted]
- mattmaroon 3y agoIs this really HN-worthy? It’s basically just a tweet from a guy saying he doesn’t like something. I don’t like it either but there’s nothing thoughtful or thought provoking in this particular post.
- inglor_cz 3y agoI think it is worthwhile to consider the ramifications. We are used to surge pricing in some sectors. What if it comes to some other, traditional sectors. Should there be surge pricing in, IDK, healthcare? It certainly feels dystopic, but it is worth discussing in detail. I am not sure if I can think of all the consequences myself. I agree that the original post is neither well thought out nor particularly well written, though.
- mattmaroon 3y agoYeah and I mean, no shade, the guy wasn’t trying to write a New Yorker article. Nothing wrong with saying “I don’t like X” on the internet. Just doesn’t seem like an HN story but I guess that’s what voting is for.
- rolph 3y agointeresting branch, lets also consider surge insurance, or surge law enforcement
- inglor_cz 3y ago"surge law enforcement" In the immediate aftermath of the 2002 floods in Prague, a lot of police and even soldiers were deployed to the flooded areas to prevent looting. I think this was a sort-of surge law enforcement. The problem was anticipated and prevented, though at some extra cost.
- rolph 3y agothe price could be set for regional differences such as response time, response duration, staffing numbers, of course unitary demands [swat;riot] would have a pricing scale as well.
- inglor_cz 3y agoWell, there was a notorious situation in Ancient Rome where a private fire service would respond to fires and the owner of the fire service would bargain with the owner of the house. If the house owner was willing to sell him the house for a low price, the firefighters would be allowed to extinguish the fire. Otherwise, no. I don't think modern societies would tolerate that, but it is interesting to contemplate the idea that something like "surge pricing" was used in times when people didn't know what "zero" or "America" was.
- Ekaros 3y agoI wonder if surge-pricing would work in SaaS startups. Charge more for actions done in regular work hours and less on weekends and holidays.
- cglong 3y agoI think the topic is News relevant to Hackers, but I agree this link isn't the best representation of it. I think something like https://news.ycombinator.com/item?id=39526455 https://news.ycombinator.com/item?id=39526455 would be better for reporting on this.
- mattmaroon 3y agoYes, exactly.
- ipsin 3y agoTo me, this is the same as the "loyalty cards" that provide "discounts" in U.S. grocery chains like Kroger's & Ralph's. They've already decided to take your money with higher prices, and dole out small discounts for people who want to play their games. As long as I have a choice, I will avoid companies that play such games.
- GuB-42 3y agoAccording to the story of JC Penney, people like their discounts. When the company tried a "fair and square" pricing strategy, it was a huge failure and they got back to the usual way.
- jerlam 3y agoWell, the customers didn't like it, but the business continued to fail after changing back. Stock price declined, stores were closed, and eventually the company declared bankruptcy. It may have been one of those "customers wanted the faster horse" situations where the business tried to build a faster horse.
- perlclutcher 3y ago[dead]
- scotty79 3y agoIt's the same thing as late hours discount. Food is often cheaper hour or two before closing. This helps reduce waste.
- JohnFen 3y agoIt's not at all the same thing. Late hours discounts are fixed and you can plan for them. Dynamic pricing means that you don't know what things cost ahead of time.
- scotty79 3y agoAnd fixed price all day is even more predictable. But also more inefficient. There's an optimum somewhere. It will be found.
- inglor_cz 3y agoI have a conflicted view on that. On one hand, I really dislike being fleeced. On the other hand, price is a signal and if there is a shortage of taxis/fast food, maybe I should be thinking about alternatives or not using the service at all. Overconsumption is a thing too. My experience with Uber says that it is a lot better to pay more, but be sure that the car actually comes, than being promised a bargain and then left at the curb in drizzling rain at midnight, because everyone cancels on you.
- cs702 3y agoSurge pricing works well only if there is real competition. Think: multiple competing machines selling bottled water/soda within a short walking distance. I'm not sure it would work well for consumers in a monopoly or duopoly. Think: only one bottled water/soda machine available on a really hot day.
- paxys 3y agoRestaurants already charge different prices in different locations (depending on country/state/city/neighborhood). Restaurants already have different breakfast/lunch/dinner menus with similar items but different pricing. Restaurants already charge different prices depending on whether you use a delivery service or order in person. Restaurants already do weekday discounts, late night/clearance discounts, and "surge pricing" for special event days. Restaurants already have coupons, "dollar" menus, loyalty cards and several other ways to implement price discrimination. Nothing about Wendy's plan is new or surprising.
- meheleventyone 3y agoI think the dynamic nature of surge pricing is the real difference. With all the things you list as a regular customer you have a reasonable chance of knowing about most of them and choosing when and where to spend your money. With surge pricing you just get unlucky.
- jprete 3y agoThe difference between all of those other mechanisms and surge pricing is customer expectations and control. All of the discount systems you talk about are predictable, so the customer doesn't need to spend any energy re-evaluating the purchasing decision; they can decide once that they're a regular customer, a discount-only customer, or not interested. Surge pricing makes every single commercial interaction into a negotiated decision. The companies usually do it algorithmically so it costs very little; it's the customers who bear the brunt of the invisible transaction cost, by constantly forcing fresh re-evaluations of the transaction.
- tomjakubowski 3y agoYeah, it's the asymmetry here of that cost that is the problem. Consumers could fight back if pricing data were as accessible to us as it is to retailers. Leveling that out is part of the datasette philosophy, I think. An important question is how to scale that up so there's a collective effort on consumer behalf to resist this.
- RcouF1uZ4gsC 3y ago> The idea of fast food implementing surge pricing is bullshit. I actually think this is fine, especially for fast food. Fast food has so much competition, in general, that surge pricing may drive the price conscious to other competitors, and reduce the waits for people that really want Wendy’s.
- aresant 3y ago1) Dynamic pricing is used in virtually every industry to better align utilization rates (and yes, increase profits). EG - Staffing a restaurant where you need 2x the staff between 7 - 9am, 12 - 2pm, 4-6pm is hard. Smoothing demand with pricing lower in off hours, higher on rush drives efficiency. 2) What stands out as a larger issue is the "“AI-enabled menu changes and suggestive selling”. Suggestive / upselling means they are going to tune AI to figure out how to sell more of their highest margin products with perfectly tuned AI to separate you from a few more shekels on each order. EG "add a 36oz coca cola to that order for X cents more." where virtually "x = anything" is a win for Wendys. And a disaster for human health. (1) https://www.ajc.com/news/nation-world/burger-chain-wendys-looking-to-test-surge-pricing-at-restaurants-as-early-as-next-year/UYVJID3VD5ERVOUMYHJU3LR3RI/ https://www.ajc.com/news/nation-world/burger-chain-wendys-lo... (2) https://www.cbsnews.com/news/wendys-surge-pricing-dynamic-pricing-uber/ https://www.cbsnews.com/news/wendys-surge-pricing-dynamic-pr... (3) https://www.wendys.com/blog/drive-thru-innovation-wendys-freshai https://www.wendys.com/blog/drive-thru-innovation-wendys-fre...
- LazyMans 3y agoThis has it's benefits. Helps smooth demand. Really sucks for anybody expecting their meal/item to be a specific price, then you arrive and it isn't. I understand this may be a point to drive people towards ordering on an app, further smoothing demand during busy hours. There is something dark about having to watch the market price of a Dave's Single on my phone and locking in my order. Can I set a strike price? This really screws anybody with limited income and who isn't "savy" enough to order their burger on an app.
- jameshart 3y agoThe derivatives market is where it’s at. Sophisticated Doordashers will keep an eye on the prices for Quadruple Baconator futures and buy low in order to be able to sell into the peak demand prices later.
- ginko 3y agoLooking forward to getting stale burgers delivered from fake delivery restaurants.
- deleted 3y ago[deleted]
- benced 3y agoShould probably take a stab at answering "does price discriminating boost profits?" before writing something like this. (My anecdotal opinion would be no - airlines price discriminate like crazy and that's a very low-margin business)
- paxys 3y agoPrice discrimination may boost profits if implemented correctly, but more than that it benefits the market as a whole, since more buyers can get access to services that otherwise may have been beyond their budget if the sellers were forced to pick a single price.
- tennisflyi 3y agoJust wait for dynamic/real time pricing based on your income
- GuB-42 3y ago> It effectively means “we charge extra when you need us most" It also means "we charge less if you are flexible" Done right, I generally see dynamic pricing as a positive thing, generally more fair than a fixed price for a given amount of profit for the company implementing it. Here is the idea. Let's say a company offers a service for $50 during rush hour, $10 otherwise, the alternative being a $30 flat fee. In order to get off rush hour, you need to wait for an hour. On a flat fee model, you also have to wait 10 minutes during rush hour. Not let's say your time is worth $15/hour, you can wait an hour, and the service would have cost you $25 or 1h40 of your time. Now let's say you are richer and your time is worth $100/hour, you don't want to wait and pay these $50, that's 30 minutes worth of your time. Had it been a flat $30 fee, the $15/hour guy would have spent 2h10 worth of his time, while the $100/hour guy would have also spent also about 30 minutes worth of his time (including the 10 minutes wait). So, total value, the $15/hour guy got it cheaper, while the business and the $100/guy got even.
- JohnFen 3y ago> I generally see dynamic pricing as a positive thing I don't, because it makes it impossible to know what things cost until you are at the point of purchase. I see dynamic pricing as companies being actively hostile to their customers, and so avoid doing business with ones that do this.
- ryandvm 3y agoIf, hypothetically, prices for the next 30 minutes were published online through a standard API so that customers wouldn't need to install dozens of apps, would this ameliorate your concerns? I kind of agree with the previous poster that, if done properly, this would benefit the seller and the consumer. "Oh, cheeseburgers are a dollar right now at Wendy's, let's go there instead" has an interesting sort of cost-savings allure to it on a road trip.
- JohnFen 3y agoNo, it wouldn't ease my concerns at all. If anything, it would make the whole thing even more irritating, because then I'd have to have access to, and use, the internet (bringing all of the issues the internet has with it) when doing things that should in no way have to involve the internet. Added: I think what would make the idea more OK with me is if the prices are fixed, but there are dynamic discounts applied to them. Then people like me will know how much things cost, and sometimes be surprised by a discount. It would change the whole vibe from "I'm being taken for a ride" to "I got a gift".
- AtlasBarfed 3y agoSurge pricing should be known as "surprise billing". Because the next step after getting consumers to accept that is to play lots of games with nondisclosure of price.