The 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.
Yeah, 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.
The only way to fight back is to cease being a customer. You don't need price information for that.
How are you going to "fight back" with price data? If you shift your habits to buy when the price is low – that's what they want you to do! A restaurant is far more efficient (read: profitable) when there is a steady stream of customers all day long, rather than having nobody in the place at 3PM and then a flood of people at 6PM. If a lower price can compel you to eat at 3PM instead of 6PM, that's a win for them.
> The only way to fight back is to cease being a customer. You don't need price information for that.
This is the approach I take. I don't think of it as "fighting back", though, as my goal isn't to change the bad behavior of companies. That's largely impossible.
Instead, it's just a stance of pure self-protection. The only way I can protect myself against bad companies is to not engage with them at all.
I 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.
Yes it is. Saying happy hour existed before this announcement so any kind of price discrimination is not new or surprising ignores the human psychology of it all. Yes, the math works out the same if I charge $5 normally and discount it $1 during happy hour, and if I charge $4 during happy hour, and surge price $1 all other times, but people don't like getting charged extra for things because it feels like they're being cheated. Saving money on the other hand feels like something good has happened. Saying oh but that's just feelings and emotions dismisses the fact that we're humans that have feelings and emotions. Emotions like surprise. This is surprising, because it feels like Wendys just announced "hey, we're going to go gouge our customers. Have fun you guys!" If someone wanted to get into PR and the business of writing press releases, this would be an example of what not to do. Of course this isn't a new thing, but you call it dynamic pricing, say it's cheaper during the lull, and never ever say the word surge. With one press release, Wendy's has earned itself a bunch of bad press, and a bunch of fanatics who will shit talk them at recruiter opportunity and boycott their restaurant because they couldn't be bothered to put out a really lame and boring version of the same thing - that they're spending $20 million to modernize their in-store menus.
> 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.
> 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.
If, 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.
No, 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".
This 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.
The 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.
Is 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.
Yeah 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.
In general, probably not. Ideally all of the actions would take place during regular work hours so that you don't have weekend support costs.
If you cannot keep up with compute during regular hours, then perhaps you would find some benefit in seeing some of the load distributed to weekend hours.
> Should there be surge pricing in, IDK, healthcare?
There are no "shoulds" in life – if you want to offer healthcare services under a surge model, go nuts – but it is unlikely that surge pricing would be beneficial in healthcare. Surge pricing meant to incentivize shifting some activity to another time of day.
Routine healthcare needs are generally already scheduled by appointment to ensure appropriate distribution. As such, there are no surges. Unexpected healthcare needs may encounter surges, but as they are not expected, a higher price doesn't alter incentives. Nobody wants to have unexpected healthcare needs in the first place. They aren't thinking "You know, a hospital visit is cheaper at 11AM. That's when I'll choose to break my arm!" Without that, you don't gain anything with surge pricing.
But someone thinking "You know, lunch is cheaper at 11AM. That's when I'm going to start eating lunch!" is quite realistic and beneficial to the restaurant. And, indeed, surge pricing is nothing new for restaurants for exactly that reason. Of course, traditionally, they have called it "happy hour" rather than "surge pricing", but the idea is the same.
if we define surge pricing as being incentivized to shift activity to another time, then arguably it's already there for Americans. If I call 911 and take an ambulance to the ER, it's gonna cost me way more out of pocket just to get there even before I see a doctor. If I schedule an appointment and see my PCP in a couple of weeks, all I pay is there deductible. So I'm incentivized not to go to the ER for some minor thing that can wait until I can get to the cheaper urgent care in the morning, or my PCP in a week or two.
The math for happy hour looks like a similar thing, but it's not, because alcohol. drunk people do dumb things and one of those things is not leave and spend money and be entertaining, among other things.
the 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.
Well, 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.
I 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 would be better for reporting on this.
To 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.
According 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.
Well, 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.
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.
Price 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.
Surge 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.
1) 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.
Surge 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.
It'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.
> 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.
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.