Supply & Demand

One of the things that has beaten in to my head when trying to understand economics is “Supply & Demand.”

It’s why scalpers can sell PS5s for a premium and why you can get a copy of Madden 18 for the price of Jimmy John’s day-old bread.

Why can’t a store offer real-time pricing based on supply and demand?

The Pitch

I want to own and operate a food business that operates purely on supply and demand.

The company’s financials will be fully transparent. We will sell my goods at whatever price the market deems is appropriate. Seems fair.


I am shocked to see stores charge $1.59 for a donut made 12 hours ago. If your store is about to close and you will throw these donuts away, why not slowly reduce the prices until they are near zero? I see the grocery bakery clearance section, but I want a live system that monitors my inventory and allows customers to express their interest at different prices.

There are food trucks that will tweet where they are going to be at what times. Why not also give updated real-time pricing? Are our customers not showing up? Say that we will reduce prices for the next 30 minutes to increase demand.

You go to a bar, and happy hour is about to end? Why not instead create a slowly increasing price as more customers arrive?

I shop and support Costco because they treat their workers well, and I know that whatever price I’m paying for the item I’m buying is reasonable. It might not be the cheapest, but I don’t feel like I’m being taken advantage of. Why not run a restaurant the same way? Here are my costs, here is my supply, what is the demand?

The Downside

People don’t want to feel like they’ve been lied to. If they get a bill for their food, it can’t be a single cent different from what they agreed to pay. This can easily be handled by having real-time pricing digital menu boards and apps. But it could create issues if you order something, it’s one price, but when the bill comes, the customer sees that they could have paid less.

There will be people who refuse to shop at our business because they don’t want the variable of food price added to figuring out where to go for dinner.

There will be people who come to our restaurant and be confused by this new pricing scheme and make our employee’s lives miserable.

We’d have to make the logic very simple and clean, and easily enforceable.

The Plan

Why not try something simple and seasonal? An ice-cream truck.

Create a business plan, show your expenses (truck, machines, ingredients, labor, etc.), and then forecast when you’d like to turn a profit and what you’d like that profit to be compared to your costs.

Then, hit the road. Broadcast on Twitter your location and reference your real-time pricing menu online. Then integrate your point of sale with your inventory.

Show to people live how well your business is performing.

You keep your scoop of ice cream on a scale to allow for real-time quantity. This would allow you to sell different flavors of ice cream at different prices. Does no one want your Hubba Bubba? 40% off. Your mint flying off the shelf? 25% increase.

You only have so much room in your truck for inventory and the longer it sits the less money you make. Maybe the forecast is calling for rain, reduce prices by 30% across the board. See if people come.

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