Outsmart Dynamic Pricing So You Can Save Tons of Cash!
When Wendy’s announced that it was planning to roll out dynamic pricing in 2025, the news set the internet ablaze. The idea that a burger can cost you one price at one time of the day and a higher, “beefed up” price when the store was busy rubbed a lot of customers the wrong way. The backlash was so swift, it prompted the company to roll out $1 burgers as part of its March Madness promotions just a week later. And they aren't the first business to utilize this way of charging.
Perhaps you noticed how some of your favorite stores now have digital readouts of item prices? They’re also phasing in dynamic pricing. But few have come out and announced it the way that Wendy’s seemed to do last week. The shockwaves spread so far and wide that the company released a second statement clarifying that it has no plans to utilize dynamic pricing at peak times when it rolls out new digital menu boards next year.
What exactly is dynamic pricing?
Dynamic pricing is a pricing strategy leveraged by businesses to capitalize on changing demand, market conditions and seasonality. The idea is that when demand is high, prices increase, and when demand is low, prices decrease. “Companies use it to smooth demand and maximize revenue and profitability,” says Neil Saunders, the managing director of retail services at research firm GlobalData. “Dynamic pricing is mostly used in sectors where supply is limited – such as in air travel, hotels or ride-hailing where there are only so many seats, rooms and cars at any given time,” says Saunders. “It is much less common in retail.”
But since there are companies and stores resorting to this pricing tactic, whether you’re looking to order dinner, buy an airline ticket or request a ride, here’s how to beat the system to score the lowest price both in person and online.
Shop at off-hours
Most businesses that use dynamic pricing raise their prices when they have the most customers making purchases, such as airlines, gas stations, hotels and online retailers. Even some grocery stores have higher prices for fresh deli foods, such as sandwiches, during their peak lunch and dinner hours than they do early in the day or after the dinner rush. Luckily, this makes it easy to save cash since it means you can simply try shopping at a slow time. For example, when browsing online for airline tickets, hotel rooms and products, aim to make your purchase early in the morning or late in the evening, which is when most folks aren’t logged on. And when shopping at a brick-and-mortar retailer, find out their slowest hours by searching their name and address on Google. For many businesses, you’ll get a graph on the results page that indicates when they get their most and least foot traffic, helping you pinpoint their off-peak times.
Related: Groceries on a Budget? Yes, You Can Slash Your Bill With These New Ways to Save
Try a different zip code
When visiting online retailers, some ask you to pick the location of your nearest brick-and-mortar store before you shop even when it has nothing to do with orders that are shipped to your home. It’s just a tactic that stores use to figure out where you live so they can adjust the price if they think you’ll pay more. The good news? You can change the location of your local store after you’ve already selected it. As a result, you can experiment by picking different zip codes to see if prices for items you want change based on the neighborhood. If they go down, set that location as your local store. It won’t impact where your purchases are mailed!
Use different devices
Annoying, but true: Most online retailers can collect and view your virtual shopping habits through “cookies”, which are digital pieces of information that are stored on your device. This data may change how much stores charge you based on prices you’ve paid for merchandise in the past or which websites you’ve visited. Fortunately, it’s easy to check if you’d be charged less without this virtual cookie trail: Simply browse from a different device than you usually use for shopping (such as your smartphone or tablet) and compare costs. Or avoid creating a cookie trail altogether by using a “private” tab on your browser when you surf the Web and shop. To open it, tap the browser menu (usually three dots on the upper right-hand corner) and select “Incognito”, “InPrivate” or “Private” mode. Once you close the tab after you’re done shopping, your digital history is erased!
Tip: Delete credit card information stored in your online accounts and enter it manually each time you pay. Some online retailers show you prices based on the type of credit card you’ve stored, raising them if they consider yours a premium card.
Get price-drop alerts
Frustrated by online prices that rise and fall, making it difficult to know the right time to snag a bargain? You can get alerted when the price of an item you want drops for free! For online products, install the Honey app to your computer or smartphone from JoinHoney.com. When you shop online, click the Honey tab to find out if the current price is lower or higher than it’s been in the past month. If it’s high, click a button to add the item to your “Droplist” and you’ll receive a notification when its price goes down.
Traveling? You can track the price of airfares at Google.com/flights by searching for a flight and dates, then toggling on the “Track prices” option. And you’ll be alerted if a price for a hotel room is lower than usual when searching for hotels at Google.com/travel/hotels.
This YouTube video from Business Today gives tips to outsmarting dynamic pricing while looking for airline tickets:
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