This is rare enough to merit a mention, so let’s start here: congratulations to Le Monde and Sylvie Andreau for this well-documented and well-supported article, which breaks away from the banalities we often hear in the general media on the subject of Yield and dynamic pricing. Nevertheless, 4 points deserve some clarification:
Segmentation or discrimination?
The economist quoted in the article, Philippe Moati, co-founder of ObSoCo, insists on the notion of justice and social norms: « If the price difference is attributed to a non-legitimate cause, it’s not acceptable. Price discrimination is not allowed. This is clearly what happened with concert tickets. The practice ran up against a principle of fairness, especially as it was unusual in the music industry » .
He’s partly right. The segmentation is permitted because it is legitimate. discrimination is not, of course. This legal clarification is important. A little skill and a lot of common sense are enough to distinguish the two. On the other hand, jacking up the price on a concert – even indecently – is not illegitimate. It may be clumsy, counter-productive and ill-timed, but it’s not discriminatory (it’s segmentation by date of purchase, modulated by fill rate).
The economist qualifies his statement at the end of the sentence. He points out that beyond the legal, there is market acceptance.. Tous les consommateurs ne sont pas forcément prêts à digérer ce qu’ils ont déjà accepté dans les secteurs du tourisme et du transport en matière de variations tarifaires. Ce qu’ils ont compris dans l’hôtellerie ou l’aérien, ils le transposent plus difficilement quand il s’agit d’un dentifrice, d’une place de concert ou d’un robot Moulinex.
This is an important component to take into account. The market educates itself. If it’s not ready to adopt a practice, it can be pushed a little, but in small steps. On the concert in question, it looked more like a torrent of protests, a sign that Yield had probably been practiced too brutally.
Do prices really move all the time?
Later in the article, we talk about “ultramodern tariffs” and ” prices that are constantly changing”. Let us qualify this statement. Even in the airline industry, which has long been a master of the art of changing prices, fare changes are actually quite infrequent. The combination of dates, flight numbers and trip types gives the impression that every flight changes price every day. But this remains an illusion.
There are many prices available at the same time, depending on the type of purchase (One Way or Round Trip, more or less flexible fares, weekday or weekend travel included, baggage options, quick check-in, choice of seat, etc.).
This doesn’t mean that prices change all the time, just that there are a lot of them.
How can we maintain price consistency?
Arnaud Grojean, head of data analysis at Carrefour, has some pertinent thoughts on price consistency. He cites the example of ham, where the price of a pack of four slices must remain consistent with that of two slices. When there are millions of prices, the exercise is not trivial, and we regularly find, for example in the campsite sector, mobile homes for 6 people cheaper than those for 4 people, with the same level of comfort.
Avoiding these inconsistencies requires a thorough understanding of pricing engineering and its underlying mechanisms, which enable price variations to be cascaded while maintaining, by design, the consistency of pricing positions. This is a constant challenge in price management.
Unfair practices or yield management?
Finally, what we refer to at the end of this article as “dark patterns” or “manipulative processes” refers directly to the more global work carried out by public authorities in recent years to clean up commercial practices. This affects RM to a greater or lesser extent, but of course it is also a concern. The DMA (Digital Marketing Act) and the recent Omnibus directive are designed to regulate and limit practices, some of which were clearly abusive, such as slashing prices after a fictitious price increase, announcing false stock shortages or using IP tracking. These procedures are not Yield Management levers, but bad commercial practices that RM must combat.
Good Yield takes responsibility. There’s no need to hide behind hidden price hikes or unfair business practices. The rule is simple: if you’re comfortable explaining what you’re doing to a customer eye-to-eye, do it. If not, you need to rethink your approach.
Keywords: dynamic pricing, tariff segmentation, discrimination, tariff variations, tariff consistency, commercial practices, Yield management, …