The general public first became used to the concept of surge pricing about a decade ago thanks to the rise of ride-share programs such as Lyft and Uber.
Alternatively referred to as “dynamic pricing,” (arguably by companies that realize that “surge” has some unsavory connotations), the practice is supply and demand distilled down to its most potent form.
Basically, in the surge pricing model, prices increase in real time whenever demand is high and supply is low, and decrease whenever demand dies back down. An algorithm is often involved, as is seemingly always the case these days.
As soon as ride-share services began to catch on with the public, people would complain that they’d have to pay more (sometimes a lot more) to get a car during rush hour or other peak hours.
Some economic experts were quick to defend the process, arguing that no one had to opt-in and that it was ultimately good for consumers.
It would be safe to say that a large swathe of the public does not agree with this take.
Surge Pricing Is Now Everywhere
The pro argument for surge pricing is that it simply reflects the demands of the marketplace, and if people want something when there’s a limited supply, then the cost will naturally go up, and people who want to pay that price are free to do so.
The anti-argument is that many people feel this is just a way to use fancy tech-world jargon to justify price gouging.
Sure, supply and demand is the driver of the economy. But critics point out that the very concept of progressivism is fueled, in large part, by the idea to, at the very least, sand down some of the rougher edges of the economy so people who aren’t rich do not constantly feel like they get the short end of the stick.
Surge pricing has now migrated from the ride-share world to many other industries, and the result is that now more people hate the concept than ever before. You can do economic theory all day, but people just aren’t into the idea of having to pay ten to a hundred times for the set price of a Taylor Swift ticket.
So at this point, people who own companies like surge pricing because it can boost profits, and people who have enough money that they don’t sweat most prices are basically fine with it, and people who have to keep an eye on their household budget resent the practice, but also feel like there’s not much to be done.
But to be fair to the surge pricing backers, they do have one salient point. Sometimes, those surges do wear off, eventually, in non-Taylor Swift scenarios.
Disney’s Surge Is About To Recede
Walt Disney (DIS) – Get Free Report made some changes to its apps programs, replacing the free FastPass+ with paid Genie+ and Lightning Lanes.
FastPass allowed guests to make up to three reservations for rides and attractions. Genie+ now roughly does the same thing, for a price, letting guests reserve spots on rides, attractions, character spots, and events. However, many new and popular rides were kept in the separate, standalone Lightning Lane system, which is basically Disney’s premium service.
While many fans grumbled that they had to pay more for something they once got for free, they did indeed line up to pay for it. At a Bank of America conference on September 7, Disney Parks Chairman Josh D’Amaro said the Genie+ was doing “phenomenally well” and much better than Disney had originally forecasted.
The Genie+ operates on a surge pricing model, and over the recent holiday season, it hit an all-time high of $29 per person for a 12-day stretch.
The cost of the app will vary based on anticipated crowd levels, and the longer the wait time, the higher the price. Prices are expected to stay high in the near future, but should drop down to between $20 to $15 by the end of the month, according to Blog Mickey.