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Jul 20
2015

Is Dynamic Pricing Right for You?

Posted by: Steve Marr

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Dynamic pricing is the practice of setting price based on demand at a given time rather then using set pricing for every transaction.  Some golf courses have started to use dynamic pricing.  They charge different prices for tee times based on demand. Peak demand times like holidays, weekends, and good weather seasons, may be higher. The price goes down when business is slower as a way to encourage more customers to come. The goal is to match pricing to demand as a way to even out the number of people playing golf. During busy times they can’t add tee times. However, when a course has tee times with no golfers; that time is lost permanently.

 

Restaurants also use a version of dynamic pricing when they offer early bird specials, available until 6:00 pm. The goal is to entice budget conscious customers to come when empty tables abound. When people are willing to wait for a table, lower cost options are gone.

I have encouraged several businesses in Arizona to offer discounts during the summer when many snow birds depart for cooler places. A carpet cleaning business also experiences a summer slowdown. Lower prices encourage business when your appointment book has too many empty spaces.

Hotels and resorts have used dynamic pricing for years by adjusting rates according to season and demand. However, when a major event is in town; room rates rise.

Peter said, "I now realize how true it is that God does not show favoritism.” (Acts 10:34, NIV) I agree that scripture instructs us not to discriminate. Some may believe that when you charge a different price to different people, it is discrimination. My perspective is that as long as you offer the lower price to everyone, the policy is non-discriminatory.

Heating and cooling businesses have been using this concept for years. If you schedule work in the fall or spring, you get a lower price because the contractor has less work. When I needed some major air conditioning work done in Arizona, I saved $400 by agreeing to delay the work until November.

How might some form of dynamic pricing or time-related discounts work for you?  Using dynamic pricing might help you increase revenue.

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