Welcome to a Brave New World of Price Gouging
Sellers have always had access to more information than buyers, and “dynamic pricing,” which harnesses the power of algorithms and big data, is supercharging this asymmetry.
Signage displayed outside a Wendy’s fast-food restaurant in Shelbyville, Kentucky, on November 5, 2017. (Luke Sharrett / Bloomberg via Getty Images)
If you weren’t already convinced the future of capitalism will involve an endless optimization of extractive capacity and the ensuing enshitification of every last bit of consumer life, well, get ready for a new frontier in “dynamic pricing.” Last month, Wendy’s floated its plan for dynamic pricing in 2025 on an earnings call. People flipped their lids and the fast-food chain rushed to clarify that they wouldn’t use their digital menus to raise prices — no, no, no, there would be no surge pricing. Quite the opposite. They’d merely use data and tech to offer better deals for customers at slower times.
Setting aside for the moment the unbelievability of their about-face, the Wendy’s plan is the tip of the dynamic pricing spear as more industries and companies look to implement the model, particularly restaurants.
Efficiency or Gouge-iency?
Dynamic pricing is an innocuous enough sounding term. Its proponents will tell you it merely refers to the capacity to raise or lower pricing in response to market signals. Supply down or demand up? The price increases. Supply up or demand down? You might see a discount. The signals could be timing, volume, approaching expiration dates, weather, or whatever might shape consumer behavior. “Surge pricing” on the other hand is exactly what it sounds like: a temporary, one-way increase in prices during peak demand.
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