Done right, it should serve the long-term interest of companies and customers alike.
May 09, 2024
malerapaso/Getty Images
Post
Post
Share
Annotate
Save
Inflation-fatigued shoppers are witnessing prices fluctuate across categories with unprecedented scale and frequency — a trend often seen as yet another cunning commercial scheme. Is the extra profit companies see from dynamic pricing worth the risk of alienating customers? If done well, companies shouldn’t be making that trade-off — dynamic pricing should serve the long-term interest of companies and customers alike. This can only happen under two conditions. First, it must represent a better alternative to static prices. Second, companies must view dynamic pricing as an integral part of customer centricity, not something antithetical to it.
Dynamic pricing, the practice of varying prices in response to shifting market conditions, has been in the news a lot recently, and not exactly for good reasons. The British pub chain Stonegate, the fast-food franchiser Wendy’s, and the airline JetBlue recently drew strong criticism for their plans to let the prices of some of its products fluctuate according to demand. In mid-April, the company that owns and operates the Legoland theme parks and Madame Tussauds museums announced its own plans to make prices vary, which the business press often refers to as “surge pricing” or “Uber-style” pricing.
-
Marco Bertini is a professor in marketing at Esade, Universitat Ramon Llull, in Barcelona. He is also senior adviser to Globalpraxis, a consultancy specialized in accelerating organic growth.
-
OK
Oded Koenigsberg is professor of marketing and deputy dean at London Business School. He is co-author (with Marco Bertini) of “The Ends Game: How Smart Companies Stop Selling Products and Start Delivering Value” (MIT Press, 2020)
Post
Post
Share
Annotate
Save
