Consider a scenario where a store can adjust the price of a single item multiple times a day. This concept, known as dynamic pricing, is more common than one might think in various areas of commerce.
“Dynamic pricing involves the frequent adjustment of prices to help companies maximize their profits,” explained Yehua Wei, an associate professor of business administration at the Fuqua School of Business, Duke University.
Ride-share companies and airlines utilize dynamic pricing when customers make online purchases. For example, Uber adjusts its prices based on driver supply, passenger demand, and even the weather.
“When purchasing an airfare ticket online, prices are updated regularly,” Wei added.
But could dynamic pricing be implemented in traditional brick-and-mortar stores?
“If prices change while I’m shopping and increase by the time I reach the cashier, I would be extremely unhappy. Many others would share this sentiment,” Wei expressed.
“I believe this raises ethical concerns,” he continued.
Earlier this year, Wendy’s hinted at experimenting with dynamic pricing, potentially leading to surge-pricing during peak hours. However, they later clarified that they had no intentions of raising prices during high-demand periods.
Related Story: No, Wendy’s isn’t trying surge pricing. Here’s what it’s changing.
Walmart recently announced plans to introduce digital shelf labels to 2,300 stores by 2026, enabling easier price adjustments. Some shoppers expressed concerns about the potential use of this technology for dynamic pricing.
However, in a blog post, Walmart reassured that the digital price tags are intended to enhance productivity, with no mention of transitioning to dynamic pricing.
“I don’t think there’s a need for excessive worry,” Wei reassured.
Experts suggest that dynamic pricing can be beneficial in certain situations, such as lowering prices to boost sales of items nearing expiration. This strategy could help reduce food wastage, for instance.
