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The exhausting new shopping trend that's breaking all of our brains

Emily Stewart   

The exhausting new shopping trend that's breaking all of our brains

When Wendy's ignited the internet's ire in February with its dynamic-pricing proposal, the fast-food chain was forced to do some haphazard cleanup. It insisted that, despite rumors, it wouldn't implement surge pricing and charge more for burgers during busy times. Instead, it said it might offer discounts during slower times of the day and roll out promos based on the weather. The new framing made sense — who doesn't love a deal — but the overall notion was exhausting. Since when do we need to gamify the cost of fries?

Thanks to inflation, people have found themselves in the grocery aisle or a restaurant or a car lot over the past few years wondering just what is going on with prices. Maybe they're not sure exactly how much the item in question used to be, but they know it sure wasn't this. And now that uncertainty has been compounded by tech-enabled (and greed-fueled) dynamic pricing, which is creeping across the economy. Want to know what your Uber ride or concert ticket or bowling-alley visit is going to run you? It depends! Even Walmart is testing out digital price tags, which it says make life easier for associates and improve the customer experience. There's been speculation that the tags could be used for variable pricing, though Walmart says its "every day low price" strategy isn't changing.

All these changes add up to one pervasive sensation: America is suffering from a major case of price fatigue.

It's incredibly frustrating not to know what anything costs, and the situation is only getting worse. While inflation is cooling, the return of discounts doesn't mean a reversion to pre-pandemic prices. People are still on edge that high inflation could rear its ugly head again. The use of surge pricing is extra anxiety-inducing.

"If you're going to introduce something that's new and that may give a pause or a hesitation, you might not want to necessarily do it when people are very price sensitive," said Carly Fink, the head of research and strategy at Provoke Insights, a market-research company. "If it was a great economy and everyone felt like, 'Oh, yeah, I have the money to spend,' I would assume they would be less nervous."


It goes without saying that inflation has been a problem in recent years. The consumer price index is up by more than 20% since February 2020. Financially and psychologically, it's a pain.

When wages don't rise along with inflation, it hurts people's buying power and forces them to change their budgets and spending habits. Low-income people in particular suffer, and workers blame their employers' greed for their wages not budging. Even when pay does rise with prices, everything costing more still feels like a loss. Inflation is stressful, and it can make planning extra challenging. If prices are going up, how are you supposed to know how much money you need to save for your next vacation — let alone stash away for retirement?

And even as inflation settles down, the tool employed to fight it — higher interest rates — adds another layer of uncertainty. If you're in the market for a house, it's tough to gauge whether you ought to wait for mortgage rates to come back down or whether you should pull the trigger now. It's a similar story if you're in the market for a new car — maybe prices have come down some but interest rates have not, and it's hard to know what the right move is.

A "good" price for something today may have seemed outlandish five years ago.

Fink said her surveys indicate that even though inflation is calming, consumers are still nervous about it, with nearly two-thirds ranking it in April as one of their top two concerns. A similar proportion said they'd become more budget-conscious than they were six months earlier. We're looking at a very "price sensitive" and "worried" consumer, she said, adding, "It's very hard for them to keep up with everything that's happening."

Even relatively small-ticket items can come with a price tag that provokes a sense of whiplash. A "good" price for something today may have seemed outlandish five years ago, and it's understandable to wonder whether today's price is just as fleeting.

"I absolutely understand shoppers who have price fatigue. It just beats you down, and certain commodities have increased so quickly," said Jon Hauptman, the founder and president of Price Dimensions, a retail consultancy. "Think of carbonated soft drinks. The whole idea of what's a good price for a 12-pack of carbonated soft drinks has changed dramatically over the past few years."

Consumers tend to be price sensitive, meaning their buying behaviors change as prices go up or down, though they're not very price aware. Most people can name the specific prices of only a handful of things at the grocery store that they buy all the time, like milk or eggs. Overall, however, they intuitively sense that prices are increasing, and broad-based inflation means purchases big and small require a second thought.

"It forces shoppers to shop more carefully," Hauptman said.


The proliferation of dynamic pricing — meaning prices that fluctuate based on market conditions such as supply and demand — makes the landscape harder to navigate. The prices of a variety of products and services aren't just different from what they were a year ago; they may be different from what they were a day ago or even a few minutes ago.

Dynamic pricing isn't new. For better or for worse, it's well established in some industries. People have long been used to it when they're booking flights or hotels, for example. It can make sense in some of these settings, like hospitality, said Timothy Webb, an assistant professor of hospitality business management at the University of Delaware who's worked on pricing strategies for sports teams and tourism spots. "It really centers around the perishable nature of the product and that its capacity is constrained," he said. A hotel can't store up more rooms to rent out during the summer, so raising prices for peak times lets it stay afloat all year, financially, and may help prevent overcrowding. Conversely, dropping prices during the slow season means it's not sitting empty all winter.

People don't like the fluctuations because you always feel like somehow it's exploiting you. Ravi Dhar, director of the Center for Customer Insights at the Yale School of Management

Still, nobody likes paying extra for a Christmas flight or their summer hotel room. Yes, happy hours and early-bird specials have been around forever, but the idea of paying extra for a restaurant reservation or meal during busy times is not great. The supply-demand forces that make peak-time Ubers outrageously expensive or Taylor Swift tickets prohibitively pricey may be real, but that doesn't mean consumers feel they are fair or good.

People often interpret dynamic pricing as a mechanism for companies to maximize profits. Provoke Insights' research shows that most consumers still aren't super familiar with the concept, but when asked what they would do if a restaurant they visit implements it, two-thirds say they would eat there less often. A survey from consumer analytics platform CivicScience found that a majority of consumers say they agree with the statement that dynamic pricing is "price gouging."

Instead of focusing on getting a discount when they pop into Starbucks during a slow period, people think about the experience of trying to order a Lyft in the rain. They're not wrong to feel this way — making money is how companies talk about their pricing choices to Wall Street.

"Companies have framed this debate around profit maximization. And so as a result, people see it as zero-sum," Ravi Dhar, a professor of management and marketing and the director of the Center for Customer Insights at the Yale School of Management. "People don't like the fluctuations because you always feel like somehow it's exploiting you."

Constant prices aren't guaranteed and never have been. Discounts and promotions are well-trodden retail tactics, and the invisible hand of the market moves on the principles of supply and demand. Every business wants to charge a higher price to customers who can and will pay more and a lower price to those who can't and won't, said Z. John Zhang, a marketing professor at Wharton who focuses on pricing. We can't blame consumers for feeling like it adds uncertainty to an already tumultuous world, he said, but this is sort of the way things go.

"If you look at the big picture, there is actually no presumption for a constant price for a long time for a particular product, and the reason is that's not what prices are supposed to do," he said. "What price is supposed to do is to mediate between demand and supply to make sure that the product is really delivered into the hands of the right people, the right customers."

That sounds fine and good, except we do not live in a world where markets are perfectly efficient, and nobody wants to be constantly watching for changing prices throughout their day. Many industries are uncompetitive, meaning consumers aren't even getting a fair shake. Plenty of companies can move their prices, whether by using dynamic prices or downright raising prices, because they're the only game in town. That's true for airlines and car-rental companies and wireless providers. It's why if you call your internet company to threaten to change services unless your bill stops creeping up, the answer you'll probably get is "LOL good luck with that."

"With the airlines, if you asked people 30 years ago if they wanted to pay different prices, they'd be like, 'No way, it's not fair,'" Webb said. "But the airline also knows that, hey, there's limited providers here, so competition does matter, and if you don't want to pay, well, that's fine. We're still at this price."

Technology is a modern-day X-factor as well. Amazon changes the prices of various items throughout the day. Both Uber and DoorDash have been accused of displaying higher prices for certain customers with low phone batteries or those with iPhones, though both companies have denied this. Today's Blue Light Special is no longer in a store aisle on a Wednesday at noon; it's on a website that knows exactly who you are and is intimately familiar with your spending habits. Companies can use your data to identify an exact price for you, which may work in your favor but may not.

"Because of this optimization, it reduces trust in the company," Dhar said. "I don't trust them to do things that are good for me. They're going to do things that are good for them."

If companies were more transparent about what they were doing and how, it might ease some discomfort. But many aren't.


There are no easy solutions here. Most economists agree that government-mandated price fixing is a bad idea. Achieving a more competitive economy is a long-term project that won't happen overnight. Inflation is getting better, but the threat of it getting worse again still looms. The answer to getting accustomed to high prices is basically to forget what those numbers were in 2019. We didn't even get into hidden fees, another layer in the what-does-anything-even-cost-and-why maze.

You can't fault anyone for feeling tired of it all. After so much economic uncertainty, and with more uncertainty ahead, we're all in our feelings about prices. A prix fixe menu sounds pretty good right now, just to, for a moment, know what we're getting into cost-wise and enjoy a meal.


Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.



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