Prescription: Dynamic Pricing for Tolls & Other Businesses

Prescription: Price Tolls Dynamically

Status: Occurring

 I wondered why governments don’t use dynamic pricing. Airlines, hotels, and oil companies price based on peaks and troughs in supply and demand. Why not tolls? In a terrible economy, municipalities need to maximize revenues. What better way to do this than to put tolls on sale when demand peaks? This can also reduce bottlenecks and allow for safer cleanup of accidents by redirecting traffic using incentives.

TIME FOR DYNAMIC PRICING FOR TOLLS AND OTHER BUSINESSES, Oct 2009

What Happened

While excited lots of governments and businesses are taking this prescription, today, we’d tweak this recommendation a bit. While dynamic pricing optimizes for the seller, it can seriously piss off the buyer. Buyers hate uncertainty more than high prices. As explained in “How Price Anxiety Kills Sales“, we’d recommend a tiered dynamic system. It won’t be as optimal, but people can budget better. The transparency will keep a lot of politicians from getting voted out by angry drivers.