I was up on the 7th floor of my office building. I opened up the Uber app and priced the ride home. $20. Ok. I grabbed my bag, took the elevator and exited the building. I knew that a pull out in front of a swanky hotel nearby was where the Uber pick up would direct me to, so I walked there. Once I was in position I prepared to call my ride. I pulled up the app. Put in my destination. $30. Wow. That changed quickly. “It’s busy in this area. Prices are higher.” admitted the App. But I’m a suspicious man. I decided to do an experiment. I walked the 50 feet from the swanky hotel back to my office. I pulled up the app again. $20. Well, I guess it’s not so busy on this side of the block, eh? I quickly called the ride. Guess where it told me to wait? Yup. Back at that pull out in front of the swanky hotel.

Why did it do this? You’ve probably figured it out, but since you got this far, let me tell you a short story.

Ruminations on nimble pricing.

One of the last times I got to hang out with my Dad was at Gariahat, Kolkata. Gariahat is a large open air market in Kolkata. It’s evolved over the years and become “modern” but it’s heart is still the small roadside shops and stalls that sell anything you want. My Dad and I went there to buy a suitcase for me. I think my Dad just missed haggling. It was in his blood.

It was a wonder to watch him work. He picked out a store. He picked out a suitcase. They he started to haggle with the man. There was shouting, there were sarcastic remarks. My dad walked away a few times and the man called him back (“Oh Dada! Oh Dada!” Dada being an endearing term for “Elder brother” used mostly to call a customer back who’s threatening to walk. “Didi” if you’re a girl.) My Dad brought the price down by 50%.

I was shocked. I mean I would maybe have haggled down 20%. My dad cut the price in half. When the money changed hands, the shopkeeper was smiling and my dad was smiling, so I figure it was a fair price. Why did the shopkeeper start so high? Why not? There are a million customers walking past his shop. The worst that could happen is he has to wait 30 seconds for another one. The best case scenario is a 50% extra profit.

There is a whole process to going shopping at places you had to haggle. How you dressed, how you behaved and how you talked all went into what price you ended up with. My Dad, being a smart village kid, was excellent at this. I, his city bred son, not so good.

My parents were ambivalent about the swanky new “fixed price” shops taking over Gariahat and Dakshinapan (another market in Kolkata). It was a bit too American for them. I, being younger, and less adept at dealing with humans, found the fixed price transactions less stressful.

But, even in places like the United States and Europe, prices, of course, are never actually fixed. What we are talking about is how fast, how nimbly, they change. In every big box store there are these things called “Sales”. There are even stores where everything is perpetually on “Sale”. “Sales” are the shopkeepers pricing things inefficiently.

You want to be like that shopkeeper in Gariahat, sizing up Dad in a second, and estimating how much he was willing to pay for that suitcase. A lot of places in the United States already do this. Unexpected places. Colleges for example.

There’s a sticker price for educating yourself. But that’s for suckers. If you walk into the college dressed in shabby clothes, holding a bus ticket in your hand, the nice lady with the red lipstick and fashionable business dress behind the big oak desk will charge less for your tuition. Sometimes, if you have skin the right color, you can get an extra cut. They call it financial aid, they call it needs based aid. They call it affirmative action. These are all fancy, feel good sounding names. But they’re just doing what that shopkeeper in Gariahat did: sizing you up and deciding how much you’ll pay.

Hospitals do this. After they save your life they’ll send you a bill. If you have insurance, the insurance guy does the haggling. If you don’t, you have to do the haggling.

In the United States the price of toothpaste is fixed, but the price of your triple bypass is negotiable.

What’s happening is that nimble pricing is now coming for the toothpaste too, and A.I. is on the case. A.I figured out that out of town customers staying in that swanky Hotel in the middle of the business district would be willing to pay $30 for that ride. A block away, next to the slightly shabbier office building, the A.I has figured out the office drones will pay $20.

That shopkeeper in Gariahat is now immortalized in an A.I. somewhere.

And somewhere my Dad is smiling and thinking he did right by me, since I did figure out how to shave 30% off that ride by walking away. I’ll try for 50% next time Dad.