When Avieta Kaokept opened her Som Tum Thai Bistro last November, she wanted to try something different. In addition to her lunch and dinner menu, she offered something in between — a few regular items at especially low prices between 2:00 and 5:00 p.m.
Welcome to the new world of capacity-based pricing. Americans have seen it only occasionally, usually related to their travel habits. Hotels charge lower rates on slow nights. So do parking lots. Airlines sometimes change fares several times in a single day. Cities and states are experimenting with rush hour surcharges for toll roads and bridges.
It’s about to spread to all walks of your life, though walking itself may be one of the few things that will never be affected.
It’s well underway in London, where to my eye almost half of the restaurants on major streets offer some sort of off-hour discount. They are hoping to lure tourists and other passersby who may not necessarily be hungry, but whose thirst for a bargain is never slaked.
Happy hours and early bird dinner specials were just the beginning.
It makes good sense. Once the lunch crowd has gone back to work, the doors remain open while the kitchen preps for dinner. The ovens are hot. The air conditioning is cool. A single server usually can bring in enough business to cover salaries and utilities for those in-between hours.
Restaurant prices someday may change constantly like the stock market ticker tape, giving customers real-time feedback about supply and demand. As consumers embrace a cashless society, fluctuating “market rate” prices will go unnoticed.
Too bad for the Eugene Water and Electric Board that their plans to introduce smart meters has put them just a little ahead of that curve. EWEB officials have been perfectly clear that the new meters will cut some costs. Meter readers need a salary and health benefits. Smart meters need only a radio signal connection.
EWEB has been less forthright about capacity-based pricing. The new technology will enable them to set prices according to the hour of consumption.
Is this social engineering? Of course it is. Is that bad? We haven’t made up our minds yet. Culture hasn’t yet caught up with technology.
Other public utilities have been down this road before. Thirty years ago, I lived for a short time with my then-bride and her parents in Connecticut. They had a regimen of running the dishwasher before they went to sleep, except on the nights when they were running the clothes washer instead.
Connecticut Light & Power once had lower nighttime rates, after industry and office buildings were no longer straining the system’s capacity. Even after CL&P’s capacity expanded and their nighttime discounts ended, my in-laws continued to run their hot water machines at night. They had grown accustomed to the white noise, which lulled them to sleep.
We’re adaptive creatures. Changing habits sometimes is difficult, but the change occasionally introduces benefits we hadn’t imagined. Will we change our routines to save money? How much will we pay to keep our usual conveniences?
How much influence are we willing to cede to merchants, whose businesses could be run more profitably, if only more of us bought from them at other times?
That’s the question we’ll be asking ourselves. But first, other questions will frame how we answer the key question.
When things have different prices at different times, will we consider the lowest price the “real” value, and perceive anything above it a penalty? Or will we take the highest price and consider anything less a “discount”? Or will we learn to disassociate the price we are charged with how somebody somewhere feels about us?
That’s what EWEB — and McDonald’s and sophisticated merchants everywhere — will be watching.
If you think this is just one more case of The Man trying to manipulate you, don’t go to the Oregon Country Fair on Saturday this weekend. Admission is less on Friday and Sunday for the three-day event, because Saturday is always their busiest day.
They’ve been using capacity-based pricing for years.
Don Kahle (email@example.com) writes a column each Friday for The Register-Guard and blogs here (duh).