The New York Times reports this morning that some 800 of the 4,000 pubs in the UK owned by Stonegate Group are adopting a surge pricing model.
The dynamic pricing model means that the cost of a pint of beer, which averaged the equivalent of $5.37 (US) this summer, will be about 25 vents higher on evenings and weekends.
Stonegate says that the policy will help "cope with higher costs for staffing and licensing requirements."
The move has prompted differing reactions.
"Customers have become accustomed to surge pricing across various industries, including retail and travel," the Times writes. "But some Britons said applying it to pubs went too far.
"Pete Favelle, an IT consultant in Abergavenny, Wales, said that surcharges made sense for products that had limited availability, like flights or hotels, but that charging extra for pints at certain hours was 'just a grab for cash'."
However, "Zhe Liu, an assistant professor of operations management at Imperial College Business School in London, said companies relied on surge pricing to increase revenue or to lower demand, or both. He said it was realistic that Stonegate was raising prices to cover increased costs, since it had to employ additional staffing during peak hours."
Liu concedes, however, that "while the strategy may increase revenue, it could also alienate customers and that 'the long-term effect on customer demand should also be considered'."
At the same time as Britons are dealing with a 25 cent increase, MarketWatch reports that when Oktoberfest begins this weekend in Munich, Germany, a stein of beer will cost the equivalent of $14.67 (though, to be fair, a stein of beer is about twice the size of a pint).
Economists tell MarketWatch that "the price of an Oktoberfest beer has soared at an annual average rate of 3.9%, well above the annual 2% rise in inflation and the 1.8% rise paid for beer at retailers."
- KC's View:
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I get that there is price sensitivity out there, especially during a time of inflation, but it seems to me that if people want their British pubs to stay in business, they have to be willing to pay just a little bit more during peak times. As the story points out, we're all used to it in other segments of the economy and should be willing to accept it at our local pub. (In the Uk, like in the US, people seem to be unacquainted with the actual cost of things, and have no sense of value.)
As for the Oktoberfest pricing, it is what it is. I went to Oktoberfest once, in 1979, and I have no idea what a stein of beer cost. That's in part because it is a long time ago, but also because I drank so damn many of them. If you have to worry about the price of an Oktoberfest stein of beer, maybe you shouldn't go. Or drink fewer steins.
(I was backpacking through Germany and Italy on that trip, sleeping in hostels and traveling with a Eurail pass. It was great. In my basement, I actually have a couple of steins that I stole from Oktoberfest, though I have no idea how I actually got them home, since my backpack was barely big enough for a couple of t-shirts, underwear and socks. That also was the trip on which I helped smuggle a girl from Italy into Germany without a passport, a story that I'll have to share with you sometime.)
