We are all familiar with the pain we go through in finding a cab on a rainy day, when everybody is leaving office for their homes. Sometimes it is the availability, sometimes it is the cab fare. I still remember the rainy day in Kolkata, sometime in September, when Uber charged me Rs. 600 for some 3 kms. Thank God, my organisation used to reimburse the cab fare. This practice of charging flexible prices based on market demand is called surge pricing and I was first introduced to it by the cab companies in India. I may not like it as a consumer, but this is genius.

I might have been introduced to the concept of surge pricing recently, but this has been in existence for many years. It has just been tweaked a little under different names, like happy hours, early bird discount and what not. This concept has worked so much for the businesses that it is finding its way in every industry, be it airlines or movie theatres.

In a recent visit to one of the villages in Maharashtra, I found a small roadside vendor selling pakodis following this model. The same plate of pakodis costed much cheaper during the afternoon than during the evening chai time, or cheaper in summers than in winters, that too by 20%. I could not find an opportunity to talk to his customers, but I assume they are not very happy about this. According to me, this was a very rational thing to do on the part of the vendor. He was just trying to match demand and supply, trying to entice customers at reduced prices to increase traffic and the profits. He might not know what surge pricing means, but in his own way, he had also adopted the strategy. This incident also made me understand why Gandhiji asked Thakurdas Bang to go to the villages of India, instead of U.S.A, if he wanted to study economics.