"Surge pricing" occurs when a company raises the price of its product or service if there is an increase in demand - and lowers prices when demand is weak.
Surge pricing only really works when the demand for a service is immediate.
For some, “surge pricing,” the use of algorithms to automate price increases on products and services in periods of high demand and limited supply, adheres to a basic principle of the free market economy.
Others see it as a form of price gouging, a pejorative term referring to when a seller spikes the prices of goods, services or commodities to a level much higher than is considered reasonable or fair, and is considered exploitative, potentially unethical. Usually this event occurs after a demand or supply shock after a natural disaster.
Regardless of your point of view, the use of surge pricing appears likely to increase as a growing number of companies in the on-demand economy test its application.
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