Updated: Jan 4
As part of my networking outreach, I contacted Steve Green from PMQ Pizza Magazine. Steve was certain that I had contacted him about the recent case study that they had just published in their most recent digital magazine. I actually had no idea.
Serendipity has its way though. In this digital edition, PMQ Pizza Magazine writes on page 35 about Kotipizza in Finland, and how they worked with Finnish company Priceff to implement a dynamic pricing strategy for their pizza delivery fees.
There's nothing like early validation when you're starting up a business. Even more proof that dynamic pricing can and does work in the restaurant industry. Not only did the use of dynamic pricing help Kotipizza increase revenue and profitability, it also smoothed out the peaks and valleys of demand, just as we expected. "In theory, dynamic pricing decreases demand variation – in other words, it reduces the difference in delivery demand between peak hours and quiet times. It works in practice, too Komanna says. 'It has done exactly what it set out to do: boost sales during the slow period early in the week.'"
Another angle that the article discusses is how dynamic pricing and the stabilization of demand can result in an improved customer experience. Restaurant kitchens have a fixed capacity, so when too many people order during certain hours of the day, delivery times get extended resulting in frustrated customers. "Dynamic pricing improves the overall delivery experience, too. 'Another concrete customer benefit is the fact that dynamic pricing has raised the availability of delivery and lowered delivery times during peak hours,'"
Alexander MacKay, an assistant professor at Harvard University Business School, agrees that dynamic pricing is going to expand beyond its current uses. In the article he "described dynamic pricing as 'a really exciting space. I absolutely believe that dynamic pricing – sort of smart pricing, more generally – is going to really have an important impact on the way that people do business.'"
As for Kotipizza, although they started with dynamic pricing on their delivery fees, "They plan to give dynamic menu pricing a try in the future. 'We are already looking into that. The process will be very similar – and hopefully easier since we’ve already learned so much.'"