The daily Astorian., May 19, 2016, Page 22, Image 31

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Dynamic pricing: Just how much for that
tequila shot? The charge is always changing
By JOSEPH PISANI
AP BUSINESS WRITER
NEW YORK — Down
a shot of tequila at The Blind
Burro and the second round
may cost you more. Or less. It
all depends on what everyone
else is drinking.
Tequila prices at the San
Diego bar and restaurant can
change every ive minutes
based on demand. If more
people order one tequila brand,
the price of another might drop.
Software, created by Los Ange-
les-based The Drink Exchange,
tracks what drinkers buy and
lashes the changing prices of
more than two dozen tequila
brands on TV screens hung
on the bar’s walls. On a recent
night, a shot of Espolon Blanco
tequila was $7.75 one minute
T he
Frank lin
A partm ents
and fell 50 cents to $7.25 a few
minutes later. At the same time,
another brand rose a dollar to
$12 a shot.
The quick change in prices
is known as dynamic pricing.
It’s a strategy airlines have used
for years, charging more for
lights on summer weekends
or ahead of Thanksgiving
and other busy holidays. Cab
hailing app Uber does it, too,
raising fares when more people
need a ride.
Now other industries are
doing it, including zoos, sports
teams and producers of live
shows, and even more will
likely join them thanks to
software that can crunch data
and tell businesses when prices
should go up or down. The soft-
ware companies say they have
seen rising demand for their
services. The Drink Exchange,
for example, is in more than 20
restaurants or bars.
“In the old days, dynamic
pricing was thought of as a
pricing technique used in ixed
capacity industries such as air-
lines,” says Rai Mohammed, a
pricing strategist. “But the new
AP PHOTO/LENNY IGNELZI
Frank Miller, a partner in a series of eight bars in San Diego,
shows of some of the tequila collection at The Blind Burro, in
San Diego, where the tequila prices can change every 5 min-
utes based on demand.
thinking is dynamic pricing can
be used in any industry where
demand or supply luctuates.”
That means you’ll likely
pay more to visit a zoo, catch a
ball game or watch a Broadway
show on a Saturday, when
everyone else wants to go. But
it can also mean paying less if
you go on a weekday. Busi-
nesses that use dynamic pricing
say they make more money
from those paying top dollar.
The Blind Burro, for example,
says that tequilas featured on
its TV screens sell better than
those not listed on the screens.
Crowd control
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Besides more money,
businesses say dynamic pricing
has other beneits, such as
controlling crowds.
The Indianapolis Zoo
switched to dynamic pricing
before opening its popular
orangutan exhibit two years
ago. Tickets used to cost about
$17. Now they change daily
online and can cost anywhere
from $8 to $30. The zoo uses
software from Indianapo-
lis-based Digonex, which looks
at several factors to determine
ticket price. As more people
buy tickets online for a certain
day, the price ticks up. If poor
weather is in the forecast, the
price may not rise any further.
Saturdays and Sundays tend to
be the most expensive.
As a result, more visitors are
coming to the zoo on week-
days instead of weekends, says
Indianapolis Zoo CEO Michael
Crowther. The zoo tells visitors
to buy tickets online for the best
deal. Those that show up with-
out a ticket will have to pay a
price set at midnight every day,
which can be more than they
would have paid online. Last
year was the best year for the
zoo inancially, Crowther says.
He declined to give numbers.
“We exceeded our expecta-
tions,” he says.
Icon Concerts, a live show
promoter, says sales of a come-
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dian’s shows are up 10 percent
since the company began
testing dynamic pricing a year
ago. Tickets cost $1 or $2 more
on Saturday nights than Friday,
says Icon Concerts President
Paul Meloche. That might
not sound like much, but at a
10,000-seat arena, that means
as much as $20,000 for the
comedian’s pockets or to help
pay for production costs.
Theme parks
Some big theme parks have
switched to demand-based
pricing this year.
At Universal Studios
Hollywood, which is owned
by cable and media company
Comcast Corp., one-day tickets
cost between $90 and $115 if
they’re bought online. They’ll
set you back $115 if you buy
them at the gate.
The Walt Disney Co. has
three different prices for one-
day passes to its Florida and
California theme parks based
on how crowded the company
expects the parks to be that day.
Holidays and weekends tend to
be the priciest. At Disneyland
in Anaheim, California, tickets
cost $95, $105 or $119.
Expect more businesses to
do the same, says Mohammed,
the pricing strategist and author
of “The 1% Windfall: How
Successful Companies Use
Price to Proit and Grow.”
“If Disney, a very conserva-
tive, brand-conscious compa-
ny,” is pricing this way, he says,
“then any company can do it,
too.”
That sounds like bad news
for consumers. But they can
beneit from less crowded
theme parks, making the
day more enjoyable, even if
they have to pay more, says
Mohammed. And there’s still a
chance to get a deal, if you go
on the right day.
“I think it’s good for the
consumer because it provides
choices,” he says.