6 Tools Merchants Can Use to Implement Surge Pricing
Surge pricing can be a polarizing topic, but there’s no doubt that the practice does help businesses maximize profits. Although the model was popularized by Uber, and later rolled out by food delivery services and theme parks, it’s something that businesses in almost every vertical can adopt.
Not only can surge pricing bring in more revenue during a business’ busiest times — like during the dinner hour for restaurants, or on holiday weekends for theme parks — but it can also spread out demand, encouraging customers to visit during times when businesses would typically be slow.
A number of hyperlocal marketing vendors have added surge pricing components, allowing businesses to increase or decrease prices depending on demand and other market factors. Here are six examples of platforms that businesses can use.
1. The Drink Exchange: Adjustable pricing software for bars
The Drink Exchange has its own stock market-like pricing system that bars can use to maximize profits during periods of peak demand. Bars using The Drink Exchange’s software post their drink menus on TV displays, and they can set pricing parameters to control the prices of individual items. In addition to lowering or raising prices at a moment’s notice, depending on demand, establishments can also encourage patrons to “buy low” and place their orders for additional rounds of drinks before prices potentially increase. The Drink Exchange connects to most existing POS routers.
2. Digonex: Automated dynamic pricing services for businesses
Digonex’s dynamic pricing software enables businesses to respond to fast changes in customer demand. The company works with retailers, sports venues, attractions, theme parks, and live entertainment promoters to automatically aggregate market data for pricing decisions. For retailers, specifically, Digonex customizes its proprietary technology to each client and uses key performance indicators to optimize prices automatically. Sports teams can also use Digonex’s software to adjust ticket prices based on factors like the day of the week, weather forecast, and real-time customer demand. Businesses can approve, reject, or adjust Digonex’s dynamic pricing recommendations through a web-based portal.
3. Tock: Demand-based ticketing for restaurants
Tock is a management system for restaurants that introduces the concept of ticketing and demand-based pricing. In addition to handling traditional reservations, Tock gives restaurants a way to sell tickets to prix fixe tastings, special events, and communal tables. Restaurants can adjust the prices of these tickets based on any number of factors, including things like demand at certain times or days of the week. Managers can analyze customer demand by day of the week or table size, allowing them to schedule offerings to maximize revenue. Because Tock is a complete restaurant management system, it also includes features for table management and guest profiles.
4. Upstream Commerce: Advanced pricing strategies using market data
The retail intelligence company Upstream Commerce uses predictive and prescriptive analytics, along with competitive intelligence tools, to change the way retailers grow sales. With predictive and dynamic pricing, Upstream Commerce gives both brick-and-mortar and ecommerce retailers a way to create pricing strategies that are based on real-time market data and demand. Upstream Commerce offers pricing recommendations based on predictive analytics, along with automated rule-based pricing based on business goals. Trending data allows Upstream Commerce to come up with the optimal price per product each day.
5. Darwin Pricing: Geo-targeted discounts for customers
Darwin Pricing is aiming to fill the gap between online shops and local retailers. Using Darwin Pricing’s automated app, businesses that sell online can offer geo-targeted discounts to customers who are located in cities where retailers are beating their current prices. Darwin Pricing looks at each website visitor’s geographic location and history and then uses machine learning algorithms and real world economic data to determine where prices are higher or lower in real-time. It uses “exploratory pricing” to see what prices people in a certain region will pay. Businesses have the option to use the software manually or rely on Darwin Pricing’s “pricing experts” to manage their geo-targeted sales.
6. Table8: Driving demand during off-peak times
A restaurant that’s packed from 7 p.m. to 9 p.m. each night could be virtually empty earlier in the evening. Table8 is a marketing platform that aims to stabilize demand at dining establishments by opening last-minute reservations to its members. Business travelers, foodies, and tourists pay Table8 $95 per year to become members, and in exchange they get access to last-minute reservations at popular high-end restaurants in major cities. Restaurants that partner with Table8 benefit by being able to fill tables on slow nights without having to cut prices or offer happy hour specials to get people through the door.
Know of other dynamic pricing platforms for businesses? Leave a description in the comments.
Stephanie Miles is a senior editor at Street Fight.