Technology has the power to improve how we haggle with dynamic pricing | The Globe and Mail

Uber is one of the first mainstream examples to use surge pricing to manage supply and demand. For example, it’s raining and I’m going to be late for a meeting. Demand for Uber goes up, prices surge, more drivers join the marketplace, increasing supply, and price drops again to meet demand. Beautiful, isn’t it? The visual I have when I think about centrally managed markets is lining up. It’s like going out for New Year’s Eve and trying to get a taxi, right? Low supply (what drivers want to work that night?) and high demand will do that to you if the price is set.

However, Uber is not a great example of true dynamic pricing. Uber essentially assigns a premium to a base price, and consumers find that offensive. However, behavioural economists believe that getting a new price quote every time you purchase something will become second nature. Like airline travel now versus during the regulation era.

Many new jobs created in 2016 were associated with the “gig economy.” Like a musician booking gigs, the new economy will be driven by online marketplaces of supply and demand for various products and services, allowing the self-employed supply side to make its own rules when it comes to what work it will take, when, and at what price. Pricing will be dynamic and in real time again, but not discriminatory.

We have a lot to learn about dynamic pricing: dynamic toll pricing to manage traffic and optimize the road infrastructure; dynamic pricing on the consumer side so as not to create artificial markets, especially when you consider fast-changing currencies. I think a lot about dynamic pricing in the industrial space. How can we make manufacturing sectors more efficient by leveraging dynamic pricing in a supply chain? We are entering the golden age of the networks of networks, and connection directly from the shop floor to the top floor.

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Technology has the power to improve how we haggle with dynamic pricing – The Globe and Mail.