RIDEGURU
So, companies are apparently starting to copy Uber's surge pricing to increase revenue. Remember MoviePass? The company that gave away movie subscription service for dirt cheap and now they are struggling to make revenue and being sued by movie makers? Apparentely, their answer is surge pricing!
"That could very well be the fate of a company like Uber without surge pricing. The same goes for the likes of MoviePass, the Helios and Matheson Analytics Inc. (HMNY - Get Report) company that offers a $10-a-month subscription plan that allows users to see a movie in theaters every day. The company is fresh off implementing a surge pricing model, which sent the internet into a tizzy.
Consumers may hate it, but investors should love it. Higher prices, more profits, perhaps a higher stock price.
Basic economic principles in a competitive economy hold that the price of goods and services will move to the point of equilibrium, where supply and demand meet. Demand increases? Price and quantity move higher, and supply follows suit. Further, with today's costs of doing business in a high-tech, rapidly evolving world, companies have to find creative ways to raise prices."
Here's the bit on MoviePass
"For a company like MoviePass, which began surge pricing this week, the cost of doing business is high enough to precipitate a little extra cash flow sourcing where it makes sense. And with the company's stock down 92% in the last year, investors want proof some bottom line cushion is on the way."
https://www.thestreet.com/opinion/hating-on-surge-pricing-is-just-dumb-14643581
Comments
Movie pass sucks. And the reason surge pricing does not work is because they already offered customers the lower price without it. With Uber, didn't surge pricing exist from the beginning? It was more transparent than now, with numbers like "2X" and "10X" stated prior to taking a ride.
I don't know the details, but that'd be messed up if they spring this on people who already signed up.
Isn't this slightly like Verizon and AT&T slowing down Internet depending on usage? Net neutrality?
No. I know what you are saying but that's different. There is a difference between charging more for usage vs. giving you more (or less) for the same price. ..umm. yes. That.
Hmm. I am sorta confused now.