Surge pricing popping up in new places, impacting consumers
ORLANDO, Fla. - Ben Lau and his wife had their eyes set on Universal Studios during their Orlando trip, but then they got a look at the price.
Lau said, "I was absolutely shocked." Lau continued, "The admission tickets cost $205 per person, only for admission."
When FOX 35 priced a 1-Park – 1-Day Ticket for Universal, during a non-peak period – we found prices starting at $109 a day. But for the Lau family – what they’d soon learn is timing has everything to do with price. "I found out it was extremely expensive and because it so happened to be spring break times for schools, that the costs were astronomical," Lau explained.
The concept is called surge pricing, also known as dynamic pricing. It is a strategy where businesses will adjust their prices according to changes in demand. When we visited Lake Eola to ask people in Orlando their thoughts on the concept, one person said, "I would not." Jonathan Collazo added, "I used to work in restaurants. I don’t think it’s worth it."
"It’s just not right. It’s what it’s called, it’s surging, and it’s just I think, taking advantage," another added.
Dr. Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting explained, "It’s about profitability. You want to sell your good or service at what the current market conditions will allow. If you sell at one price throughout the year, you’re leaving money on the table."
The practice of varying a price to reflect market conditions is not anything new. You have probably noticed it over the years when you have gone to make an Uber reservation during rush hour, or maybe buy a plane ticket during the holidays. "You can fly on one airline from Orlando to Charlotte and depending on what day, what month, what time, that ticket price is going to vary," Snaith added.
What has changed in recent months is surge pricing popping up in other industries, like gyms, restaurants, and bowling alleys. It has always cost more for a movie ticket during peak times, but in February, AMC Theatres introduced "Sightline." It is a new pricing program that would be based on seat location. With theater seats divided into three zones, essentially, you would pay cheaper prices for front-row seats and more expensive prices for the highly coveted middle section.
AMC CEO Adam Aron tweeted, "In inflationary times, costs rise, so prices rise. Under the old system, our only option was to raise prices on all seats. Sightline lets us raise prices only on our most popular seats, but we can also hold the line on Standard seats & actually cut prices on Value seats."
Back at the theme parks, Lau agreed to come back when prices would be cheaper. He said, "For the two of us, I added it up, and it was going to be something like $950 for two of us for one day, which is ridiculous. How can a family afford to do this?"