The sheer amount of attention Uber and its founders are receiving should be proof enough that the ride-hailing app has disrupted a once-stable industry. With taxi drivers protesting and government regulators scrambling to come up with effective policies for on-demand work, Uber has experienced such explosive growth that it’s now even looking into delivery services with other retail giants.
Just how far will Uber’s reach spread when all is said and done?
For the app’s surge pricing feature, it appears as if other industries are developing ways to adjust prices based on demand as well.
OpenTable recently announced that it would be adding a “Premium Reservations” option for customers who want to pay upwards of $50 for a table of two and $100 for a table of four to book a guaranteed reservation on Friday and Saturday nights. According to OpenTable officials, the move was aimed at helping customers make last-minute dinner bookings without worrying about missing out on a favorite restaurant or occasion. However, unlike Uber’s surge pricing, the restaurants will retain all proceeds from the Premium Reservation fee.
If surge pricing was only spreading to a roughly analogous reservation app, there wouldn’t be much to talk about. However, UPS announced in September that it would be instituting a fare adjustment for its traffic-heavy holiday shipping period. In direct response to the increased number of online purchases carriers have had to handle, every service from UPS 2nd Day Air to UPS Ground will be subject to a fare schedule called “Holiday Season Changes.” While Fortune reported that the average customer won’t notice any differences in the prices of their online orders, large-volume retailers most likely would. UPS claimed that they would still work on a contract basis to ensure that service disruptions would be mitigated, if not eliminated.
Is this soon to become the new normal in the carrier shipping industry, a la checked bag charges on airlines? Early indications — such as FedEx CEO Mike Glenn’s statements in a recent earnings call — say no.
“I’m proud to report that we are not slowing or adjusting our service commitments heading into peak,” Glenn said, as quoted by Fortune. “We have been closely collaborating with our customers all year to understand their peak shipping needs, and we stand ready to deliver.”
The fact that carriers are even now discussing surge pricing proves that the strategy has cross-industry appeal. However, it remains to be seen how consumers will react to the changes in industries, such as travel and leisure, that usually cater to their whims.
According to the Los Angeles Times, Walt Disney Parks and Resorts is considering a surge pricing-like policy for Disneyland visitors who come to the park during peak periods. Under the proposal, which is currently being shown to visitors in survey settings, when booking travel, prospective Mousketeers would be given three ticket options: $115 for Gold tickets, $105 for Silver and $99 for Bronze tickets. Gold tickets would be good for park entry on any day, while silver tickets would only be prohibited on peak days and holiday periods and bronze tickets limited to off-peak weekends.
Disneyland tickets currently cost $99, the price of the Bronze option in Disney’s Uber-esque pricing structure, and the LA Times reported that the plan has come under sharp criticism from customers who participated in the online survey.
That may have something to do with whether or not dynamic pricing for theme parks functions the same way as it does for Uber, as the company recently explained through a case study. If higher ticket prices at Disneyland don’t drive demand down to provide a better experience for park-goers, then the survey respondents are right to decry it as nothing more than an attempt for greater profits.
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