The Soho branch of the Irish-themed pub states on a sign that it operates a “a variable price list” – what that means in reality is that after 10pm, the price it charges for drinks increases.This has met with a pretty hostile reaction with consumer rights expert Scott Dixon saying “The hospitality industry needs to rethink their business model instead of inventing new ways to rip people off, there needs to be more transparency.” One commentator even rather hyperbolically declared that it amounted to price gouging and would lead to the extinction of the institution of the pub.It is reported that this results in the price of a Brewdog IPA going from £7.40 during the rest of the day to £9.40, while a 500ml bottle of Budweiser goes up from £6.05 to £8.05. Even a tonic water goes up by £1 under the system, with the price rising to £3.15. Drinks purchased in the evening are also served in plastic cups, rather than glass.
However, provided that it is properly advertised (which reports suggest may not be the case here), is it really any different in principle from pubs offering cheaper prices at slack times, such as “happy hours” or discounts early in the week? Yes, it feels psychologically better to get a discount from what is perceived as the standard price, rather than a surcharge, but the basic concept of varying the price according to the time of day or day of the week is the same.
It is a principle well-established in other markets where pricing of services delivered and consumed immediately is varied according to the time. The most obvious example is peak pricing on the railways, which is directly comparable as the lower price applies most of the time, with a surcharge imposed when it is busy. And it is common, for example, for buffet restaurants to charge several pounds more at weekends for what is exactly the same offer of food.
This practice has been described in some quarters as “surge” or “dynamic” pricing, but that isn’t really accurate. These terms are applied to situations where the price is varied unpredictably in response to the level of demand, such as with the recent furore over Oasis concert tickets. Here, in contrast, the higher price is predictable and announced in advance, and applies to a specific, defined period. The licensing authorities, particularly in Scotland, would take a dim view of any pub that varied prices suddenly and arbitrarily during the course of a single session.
I can’t say I’m very keen on this concept, and I’d think less of any pub that applied it. But time-based pricing is a well-established concept in service businesses, and some of the objections to it seem greatly overdone. Having said that, I’m not sure I’d really be keen on paying £7.40 for a pint of Punk IPA, let alone £9.40.
