Blah, Blah Uber-ification
The world is obsessed with the Uberification of other industries. 1099 part-time workers, on-demand services, and slimmed-down single-purpose button-as-service apps. We know the drill. Airbnb, HomeJoy, Seamless, Instacart, Postmates. People that are “just people’ are providing us services immediately instead of more corporate/institutional outfits.
The next 12 unicorns
If 1099-ing things has made a dozen unicorns, then “Surge Price-ifying” things can create the next dozen.
Airlines have charged more on busy weekends for decades. Hotels have gone part-way and made weekend rates, plenty of strong businesses like Hipmunk, Kayak, Orbitz, etc. have made their name on capturing “surge price revenue”. But there are industries that are, as they say, “ripe for disruption.
It’s like this. If you want it a lot – pay more 😀
Lunch as a “Duh!” moment
Lunch at a sit-down restaurant costs less than dinner. Why? Because fewer people want to eat out for lunch.
WHY ON EARTH ARE RESTAURANTS RESTRICTING THEMSELVES TO ONLY TWO TIERS OF PRICING?!
There is no principled distinction between an airline charging more for a flight that leaves at a desirable time and a restaurant charging more for the same food at 7:30 PM than it does at 10:30 PM.
As dumb as it sounds, it seems the primary difference is whether or not the “menu” is electronic or not. Customers are socially sensitized to seeing dynamic pricing online because of years of experience with eBay, and flight engines.
Sample Average Restaurant Revenue by Day
There’s an excerpt of a sample restaurants revenue by day. Clearly not constant. Clearly not optimized. Restaurants have complained since the beginning of time about Sunday – Wednesday. If they are going to be open and have empty seats, if there is any room to still earn profit with lower prices that should be happening on those days. Given that Friday brings in 51% more revenue than Thursday who here thinks that the cost of the food on those two days should be the same?
E-Menus + Data == Better Pricing
The newest, shiniest iPad Mini 4 is $399. Welcome to your new menu. If you serve 60 tables per day and earn $1.00 more per customer from dynamic pricing through your e-menu that knows how many of your seats are filled and how many people are on your wait list, then a full set of iPad menus pays itself off in less than a year. There would be the ability to earn 10x that at nicer restaurants.
The choices so far are meek and going to get bulldozed
Current apps like Reserve are just trying to get you in the door and to avoid the hassle of paying a bill. Even at airports where for some reason we love segregating people by class and letting rich people pay thousands of dollars more for in-flight showers, the leading provider of e-menus isn’t providing the option to take rich people’s money for rush-orders.
Uber has done a huge share of the work of sloughing through the outrage of people who think that first-come first serve is a more fair and equitable distribution system than the “who will pay for it” system. But the economic engine will not leave that much money at the table for long. People with wealth value their time more and will pay more to prioritize the use of over-subscribed assets (like popular restaurant seats) at the most desire-able times.
One of the primary pre-conditions for a start-up is its inevitability. The inevitability of the basic economic concept of having people pay more when something is in demand and less when it isn’t will win out. The provider that builds the software to let new industries capture a share of that additional revenue will do exceptionally well.
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