Most consumers have some experience with dynamic pricing. The most memorable instances are when hardware stores increase lumber prices ahead of a storm or your local gas station jacks up prices before a long holiday weekend. These opportunistic instances are rightly met with a consumer backlash and cries of unfair price fixing. On the other hand, we expect the price of a beachfront rental to cost more in the summer and accept the higher price because we maintain control over when and where we choose to stay.
Walt Disney has capitalized on the popularity of their theme parks and increased their use of dynamic pricing techniques to capture more of your wallet. Attendance at the Magic Kingdom park grew from 16.9 million in 2010 to 20 1/2 million in 2015.
It comes as no surprise that Disney is using the allure of a magical park visit or a princess greeting to get more money from every visitor. Instead of relying on behavioral impulse purchases once you are at the park, Disney has pushed their dynamic pricing reach online to capture more revenue when you book your visit.
Most merchants don’t have a power brand like Mickey Mouse but that isn’t stopping them from implementing dynamic pricing. Online and mobile shopping has become ubiquitous and the big data analytics necessary to implement dynamic pricing is more accessible to online merchants. Dynamic pricing is reaching deeper into consumers wallets than ever. Consumer data acquisition and analytics is the driving force of this revolution. Facebook tracks your social media posts and browsing history, Google mines location specific data from us, Samsung and Apple uses beacons to covertly collect data on where we are, what we watch and even what we are listening to. As we plug more Amazon Alexa devices into our living rooms, the data stream will surge into a tsunami of geo-located real time information. This will allow companies to parse the hottest trends, mentions and social influencers in real time.
The hottest tickets have always commanded higher prices. This week a wealthy fan paid $133,000 for 2 court-side seat for game 5 of the NBA finals. Fear of missing out (FOMO) on an instagram-worthy social moment during your summer vacation will lead to higher prices as consumers seek to quench their thirst for happiness. Charging extra for a hot ticket like Hamilton isn’t new but expect dynamic pricing to spread to more mundane or regionally hot items. Consumers comfort with allowing data mining of our every whim is making it happen.
— LeConte Wealth (@lecontewealth) June 13, 2017