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comment by Isherwood

Your example of the cash register is interesting. Planet money did an interesting story on this, the birth and death of the price tag. It starts with the CEO of Coke, who suggested adding a thermometer to the side of his coke machines to charge more on hot days. This flexible pricing got a huge degree of backlash from generations who were raised on fixed prices, but the reality is that those fixed prices are a result of your cash registers.

Where once a store had to hire a clerk who knew the business, the volume of raw goods for the season, the numbers left in stock, the demand for the day, month, or year, the invention of the cash register allowed stores to hire the untrained who only had to enter in a pre-decided, nonnegotiable price. It's a great example of automation.





user-inactivated  ·  3150 days ago  ·  link  ·  

It's really odd how price elasticity is coming into fruition. A lesser known example is how hotwire and orbitz actually work called price stratification. The hotel knows that they can charge 180 per night for a given room. But they also know that there are people who will willingly pay 220 and not bat an eyelash. So they find out how those people book hotel rooms and let them pay 220 through that venue. Then they have the people who buy rooms at 180 and do the same. Finally they know that no matter what, there are some people who despite their need for a hotel room will simply not book a room at 180 a night. But they would fill the room at above cost if the room was a 'deal' or somehow impressive to them. So they sell that room through orbitz and they have a full hotel and a higher profit despite charging people different prices.

Same with airlines, first class is for people who will pay for first class, not people with money.