Thirsty in London? Beware ‘dynamic pricing’ at the pub

Thirsty in central London? Beware of “dynamic pricing”

Lesson summary

Hi there everyone, it’s Jeff and this is Plain English, where we help you upgrade your English with stories about current events and trending topics. We could just teach you a list of words to memorize. But that wouldn’t be any fun—and you probably wouldn’t remember them.

Instead, we talk about what’s going on in the world. And by listening to the stories, you feel more connected to the words and ideas you hear. Even in the second half of each lesson, we use a story-based approach to showing you how to use common English expressions.

This is lesson 619 of Plain English, so you can find all the lesson resources including the free transcript at PlainEnglish.com/619. That is all thanks to JR, the producer. PlainEnglish.com/619 to see his handiwork.

So today, what do we have for you? We have the issue of dynamic pricing in the pub. Should you pay more for a beer if the pub starts to fill up? A chain of upscale pubs in London is experimenting with “dynamic pricing”—the same idea as “surge pricing” in Uber is coming to the pub. And in the second half of the lesson, I’ll show you how to use the English phrasal verb “cut short.”

Ready to go? Let’s do it.

’‘Dynamic pricing’ at the pub

Here’s something we all know by now . If you look for a flight from point A to point B , and if you search for the exact flight again tomorrow, the price you see might be different. Same origin; same destination; same flight number; same date. But the price goes up and down in the weeks and months ahead of that flight. We know this. We accept it.

This is called “dynamic pricing.” The business changes the price based on a variety of factors, and the change can be done real-time using data. It’s common in the hospitality industry: flights, hotels, and cruises. If a flight starts to fill up earlier than expected, the price automatically goes up, based on complicated computer algorithms. There are many, many factors that affect the price an airline shows you when you search.

Travelers accept a certain amount of uncertainty when searching for airline fares and hotel rooms. Dynamic pricing helps these businesses fill their limited seats and limited rooms, with less waste than if they had pursued a fixed-price strategy.

We also see it in transportation. Uber calls its version of dynamic pricing “surge pricing.” When there are more ride requests than drivers, they raise the price. This attracts more drivers onto the road, so that, theoretically, the supply of rides matches the demand.

But travel and hospitality are not the only places you see dynamic pricing—as pub-goers in central London are starting to discover.

That’s because a popular chain of upscale pubs is now employing dynamic pricing…for a pint of beer.

You heard that right. At certain times of the week, the chain Slug & Lettuce will be charging an additional 20p for a pint of beer. At Slug & Lettuce, a pint typically costs £4, so the surcharge is just five percent. Still, it’s upsetting pubgoers, who say the charge is unfair.

The pub, for its part , says that the surcharge helps it cover additional costs, including security. But customers complain they’re being ripped off . The surcharge is unfair, they say. They shouldn’t have to pay more just because they come in at a busy time.

Are they right?

Let’s take a closer look. First, the pubgoers complain that it’s unfair. Why should they pay more for the same pint of beer, just because they come in at a peak time? On this point, I think the pubgoers are wrong. The restaurant industry has long used variable pricing—charging people different prices at different times of the day. Happy hour is a great example. The drinks are cheaper during happy hour. Lunch specials, early-bird specials, fixed-price three-course meals: these are all examples of variable pricing. So paying a different price based on time of day doesn’t seem totally out of the ordinary.

Ah, pubgoers say, but in those cases, the happy hour special is advertised in advance. We know when the discount is. We can plan our trip, knowing the price before we go. With dynamic pricing, customers never know when, or if, the price may go up. They could watch the price go up while they’re sitting in the pub.

On this point, the pubgoers have half a point: this is a new bargain. The market has accepted dynamic pricing in flights, but not for everyday items like beer. When you go out to meet friends, you shouldn’t have to cut your night short because the price is higher than you expected it to be. Plus, dynamic pricing is most justified when there’s a limited amount of something on offer: an airline can’t add 10 more seats to a flight. But in all but the busiest times, a bar can pour more pints.

But I still have to ask them: twenty pence? This would affect your decision to go out, or how much to drink? I know inflation has been bad , but by going at a peak time, you’re getting a more valuable beer. So isn’t a twenty pence difference justified to drink at the most popular times?

What about the pub’s arguments? The first argument is that peak hours cost more—in security and bartenders. To me, this argument falls flat. It’s busy and they’re selling more beer. Beer is a high-margin product: they make money on every beer they sell, so they have more money available to cover those extra costs like security, bartenders, and cleaning staff.

The pub also says that this would allow them to offer more attractive drink specials at other times of the day. This has more economic logic. Charge more during peak periods, discount more during off-peak times. Slug & Lettuce offers two-for-one deals at other times of the day. So is a five percent surcharge at peak times not offset by the 50% discount at other times of the day?

In short, I’m indifferent. I’m not too sympathetic to the punters’ complaints. But I’m not too convinced by the bar’s arguments either. Wouldn’t it have been easier to just raise prices at all times and then offer discounts during off-peak times?

Slug & Lettuce has gotten a lot of bad media attention over this. Social media, in particular , has not been kind to the chain. But I suspect the regulars who drink at a fancy central London pub during peak hours will understand about the twenty extra pence. My guess is that it won’t meaningfully change their customers’ behavior. Meanwhile, Slug & Lettuce has gotten a nice bump in media exposure over the last few weeks.

By the way, if you don’t like dynamic pricing….you’re going to be fighting a losing battle. Amazon is already doing it. Other online retailers do it: they can change prices based on your browser, device type, time of day, how much is in stock, what competitors are doing with pricing, all that stuff. And if you go to a big store and see electronic price tags on the shelves…yeah, I don’t have to tell you what that’s for.

The funny thing, though, is that dynamic pricing is not unusual in human history. What’s unusual is the fixed price. The first price tag appeared in 1861. Before that, all pricing was dynamic in a way: you had to bargain and haggle with sellers for everything.

JR’s song of the week

Today’s song of the week is “Two Dozen Roses” by Shenandoah, featuring Luke Combs. This is a country song originally from 1989, but Shenandoah re-did it with Luke Combs, a really popular country singer today—multi-platinum singer from Asheville, North Carolina.

The song opens on a regretful note—I told you it was a country song—it goes, “You say I’m not welcome here; I know it ought to be perfectly clear; but I can’t help wonder what it might be like.”

“I can’t help but wonder” is something you say when you think about what might have been. You can’t stop yourself from wondering.

Anyway, good song this week, JR. “Two Dozen Roses” by Shenandoah, featuring Luke Combs.

Next up—how have we not done this one? Cut short. We’ve done so many expressions with “cut” but never “cut short.” So here we go.