A few unusual pricing examples

Here are a couple of new (or upcoming) pricing examples you can integrate into your next lectures on Price (see Chapters 17 and 18).

• Dynamic pricing. “Wendy’s to test out dynamic pricing model as soon as next year, menu prices to fluctuate.” We think about dynamic pricing when buying airline tickets, hotels, and more recently sporting events. But fast food surprised me. More than two decades ago Coca-Cola experimented with dynamic pricing in its vending machines (hotter temperatures, higher prices); it got a lot of negative feedback and Coke ended the strategy. This might be fun to discuss in class. Here are some possible questions you could use to stimulate discussion:
  • Why is Wendy’s considering dynamic pricing?
  • What are the potential downsides and challenges Wendy’s might face in implementing dynamic pricing?
  • How might customers react to dynamic pricing?
  • Is dynamic pricing fair to all customers?
• Subscription pricing. Many companies are trying to maximize customer lifetime value (Chapter 2) with subscription pricing (Chapter 18). Two recent, and somewhat unusual examples are in the ski resort and car wash businesses. The articles linked provide more details.

Students often think price involves picking a profitable amount to charge. As these examples show, there can be more nuance to pricing strategy.