It used to be that the price was the price.
Sure, there were sales, special offers and discounts galore. But there wasn’t a different deal for each consumer. And the price didn’t constantly shift, based on supply and demand.
But combine consumer data and speed-of-light technology, and that’s what you get.
Every day, Atlanta-based Post Properties sets rent for 22,000 of its apartment units nationwide.
In determining the price, the company’s software collects data about competitors, the supply of apartments and consumer demand, along with the usual factors such as amenities, view, location and size.
“It takes all the emotions out of pricing,” said Laura VanLoh, senior vice president of apartment management.
The airlines were the first industry to use technology in this way. Software lets companies make predictions about demand and set prices accordingly. Now, the model is spreading to hotels, car rentals, cruise lines, grocery stores, theme parks, energy providers and online retail, as well as apartments.
For consumers, it can cut either way.
Sometimes the software raises prices: Last-minute customers at rental car companies can expect to pay full freight. Sometimes it lowers prices, such as when a retailer just wants to clear out inventory for the next season’s dresses.
Or perhaps there’s a classical music concert the same night as a big-time football game up the street? With 200-plus concerts each year, and a city’s worth of entertainment options, there are times the Atlanta Symphony Orchestra has to be creative about filling its 1,748 seat hall, said David Paule, vice president and chief marketing officer.
The orchestra has always charged more for the seats that are in demand.
Find each customer’s price and you can probably sell everything you have, said Robert Cross, who decades ago helped Delta Air Lines develop its pricing system.