Column Date 2006-01-22
Follow the bouncing price
All I wanted to do was buy an airline ticket. At a reasonable price. Without flying at 1 AM. Or waiting seven hours to change planes in Duluth.
But trying to figure out how much a ticket costs these days requires a degree in advanced mathematics. And a quick hand on your computer mouse. Airline ticket prices not only change hourly, but, seemingly, every few minutes.
Two days ago, a major airline website told me my ticket would cost $545.15, round trip. That seemed like a lot of money to me, so I went out to the kitchen to have some breakfast and mull it over.
Half an hour later the price was $616.15! Zoom, just like that, the airfare had gone up 13%! I’m not kidding – it went up $71 between my orange juice and coffee.
It’s something the airlines do these days to ‘maximize their profits.’ They just tell their computers to jack up the fares if seats are selling quickly, and to lower the fares if seats are selling slowly. It’s the old “Supply and Demand” concept, but now using super-fast computers.
Which leads me to wonder what will happen when other companies catch on to this trick, and start raising and lowering prices every few minutes, according to demand.
“Good morning, this is Doctor Randolph’s office.”
“Yes, good morning. I’ve got a really terrible sore throat and was wondering if I could see the doctor today?”
“Why you sure can. And you are so lucky! Not many people have made appointments today -- so you can get one this afternoon for just $99.”
“Yes, sir. Yesterday, for some reason, we were swamped and appointments were going for $225 and up, all day long.”
“Whoops. There goes the phone again and I see the price of an appointment today has gone up to $175. I’d really suggest you take it right away, sir...”
“Hi, I’m interested in changing my long distance phone service.”
“Sir, you are so fortunate to have called right now. We’re offering international calls to any country for 4¢ a minute...no, make that 7¢...no, make that 3¢...no, I believe it’s now 4.2¢...”
“What’s that price again, Miss?”
“Sir, why don’t you just say ‘stop’ and we’ll write down whatever price is on the computer.”
“Kind of like roulette you mean?”
“Yes, sir. Oh, darn, you just missed 2.9¢... now it’s back to 4¢ again...”
And let’s not forget, of course, the ultimate American purchase:
“Hi. I’m interested in running for the U.S. Senate next year.
What will it cost me?”
“Well, sir, since there are only two of these jobs available in this state, and you’re the seventh call we’ve had this week, how much money do you have?”
Now before your business takes this approach, remember that, in their rush to maximize profits this way, many of the major airlines in America seem headed for Chapter 11 bankruptcy.
I suppose it all comes down to supply and demand again: when you try to sell tickets at exorbitant prices, there may be a large demand for suckers, but there’s not a big enough supply.
©2005 Peter Tannen