What’s dynamic pricing? An operations management scholar explains
New York City unpredictable ticket pricing has strategy behind it
Whether you’re booking a plane ticket at the last minute or looking to go to a lackluster preseason football game, you might encounter what’s known as dynamic pricing.
Using this strategy, companies adjust what they are charging in response to demand. They can cut or raise the prices as high as the market will bear in real time to maximize the money they make through sales.
In addition to airlines and sports teams, hotel chains, car rental companies, ride-sharing platforms, entertainment companies, cruise lines and any retailers selling seasonal goods or hot items use dynamic pricing.
It uses specialized software and sophisticated algorithms to closely monitor the remaining number of products available, along with how much time remains before item must be sold or wasted. Prices get adjusted accordingly.