WATCH – BBC speaks to pricing behaviour expert on how ‘surge pricing’ is making its way into the UK high street

Nick de roos giving a Morning Live interview

Pricing behaviour expert, Professor Nick de Roos, spoke to BBC Morning Live reporter, Riyadh Khalaf, about surge pricing and how it is making its way into the UK high street.

Surge pricing or dynamic pricing are terms that refer to the practice of charging more for a product or service when demand is high.

While this is a common practice in some sectors, including tourism, transport and utilities, surge pricing could become a normal pricing strategy for other types of businesses, such as bars or supermarkets.

One of the reasons behind this phenomenon is that greater access to information online, also means “there are greater opportunities to learn more about customer demands… So, there’s an opportunity to quickly adjust prices”, said Nick.

Some surge pricing can be seen as a form of consumer exploitation, due to the lack of transparency in the way higher prices are set.

Nick suspects some businesses simply follow a ‘rule of thumb’ approach, in which companies “try and experiment perhaps with what happens if we raise prices a little bit at these times and maybe lower them at these times”.

While Nick stressed this is “a valid business practice”, he also warned that ultimately, the success of surge pricing in new sectors is determined by how comfortable the public is with it, as consumers “vote with their feet”.

He also noted some consumers may see an advantage in dynamic pricing, because “by having higher prices at peak periods, they (businesses) can have lower prices at off-peak periods, and maybe consumers are comfortable with that”.