Surge Pricing
Surge pricing is a dynamic pricing strategy used in ride-sharing, delivery, and other on-demand services, where prices increase temporarily in response to high demand or low supply. It aims to balance supply and demand by incentivizing more service providers to become available during peak times, while managing customer expectations. This concept is widely implemented in platforms like Uber and Lyft to optimize service availability and revenue.
Developers should learn about surge pricing when building or maintaining on-demand service platforms, as it's crucial for managing real-time supply-demand imbalances and improving service reliability. It's used in ride-sharing apps during rush hours or bad weather, food delivery services during peak meal times, and event ticketing to prevent shortages. Understanding its algorithms helps in creating fair, transparent, and efficient pricing models that enhance user experience and platform sustainability.