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How to beat surge prices and save money on everything – from flights to bills

Surge Pricing
Surge Pricing

Would you take the family to Legoland on a rainy weekday to save £20? It is no longer just the queues you will be avoiding by visiting the attraction at less popular times.

The head of Merlin Entertainment, Britain’s biggest theme park operator, announced this week it is going to introduce “surge pricing” – a model which sees prices rise and fall based on the demand at any given time.

It means families are likely to pay more on busy summer days when demand surges compared to a rainy weekday when they can make a saving.

Scott O’Neil, the chief executive of Merlin Entertainments, which also own Alton Towers, Madame Tussauds and the London Eye, defended the practice, telling the Financial Times: “If it’s August, peak holiday season, sunny and a Saturday, you would expect to pay more than if it was a rainy Tuesday in March.”

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If this all sounds a bit familiar, it’s because it is. Surge pricing, known as “dynamic pricing”, has been used by airlines since the late 1980s. It was later adopted by the hotel industry and now affects everything from what you buy online to the cost of a pint in your local pub.

As algorithms have become more efficient, companies have been able to learn more about your spending habits, further feeding the trend.

A survey by Barclays last year found nearly half of consumers say they’ve noticed retailers increasing their prices at times of peak demand. If we are moving towards a world of algorithm based prices, how can you make sure to get the price possible? Can you beat the algorithm?

Flights and hotels

Trying to find the best price for a flight can be a minefield. Do you choose from an endless number of price comparison sites, go to the airline directly, or trust a travel agent to get you a better rate?

Nicky Kelvin, an award-winning travel expert and editor at large at travel website The Points Guy, says you should employ different strategies between low cost airlines such as Ryanair, easyJet and Wizz Air and legacy airlines which fly long haul.

He says: “When it comes to low cost airlines, they release their cheapest flights first. A lot of airlines release flights 355 days before departure.

“The closer you get to departure time, the more expensive they are going to get and that’s a pretty solid path those flights follow.”

Unlike hotels, which often discount rooms at the last minute, Kelvin is adamant you shouldn’t expect any last minute dips in prices for flights.

“What doesn’t ever happen is you are a day or two before a flight and easyJet, when there are a few seats left, flogs them off for a cheap price. The only way those prices go is up, they just get more expensive.”

If the trend of low cost carriers is clear, Kelvin admits it’s far harder to predict when long haul legacy airlines offer the best price. He recommends using Google Flights, which shows whether the price of your flight is higher or lower than normal for that time of year and offers an option to email you an alert when prices fall.

One common misconception Kelvin is keen to dispel is using a private browser or clearing your cookies to get a better price.

Kelvin, who flies more than 100 times a year reviewing airlines, says: “It just isn’t true, there isn’t a hack to find magically cheaper pricing. That’s not to say it’s not worth having a go and clearing your cookies, or using a private browser or a VPN, but in our experience, when it comes down to the final purchase of a flight, I’ve never seen it where a cheaper price is available.”

Hotels often offer better prices close to the booking day to fill rooms. Most of the major hotel comparison sites have a section for last minute offers, but avoiding the sites altogether may get you a better rate. It is always worth calling hotels directly as taking bookings this way means they avoid paying commission to the site so can reduce the price they give you.

Energy

The energy regulator Ofgem announced this week it was considering introducing surge pricing to replace the existing energy cap. The price model would affect the 35 millions homes with smart meters.

The proposal suggests prices could either be split into “time bands” comprising peak and off-peak periods throughout the week or, in a more extreme case, linked directly to half-hourly wholesale market prices.

It is important to note that surge pricing – if introduced – would not affect fixed tariff customers and would only apply to customers on variable rates with smart meters. If you are one of those customers and you wanted to avoid surge pricing, your best option would be to turn off your smart meter.

You can request that your energy supplier puts your smart meter into “dumb mode”. This means it loses its functionality and stops sending automatic readings to your energy supplier, operating instead as a standard meter.

In theory, this would stop surge pricing as the energy supplier would not be able to know at what points in the day you were using electricity, only your overall usage.

Shopping

When you see something on Amazon which you feel is too expensive, it could be as simple as going and making yourself a cup of tea to bring the price down. The world’s biggest online retailer changes product prices 2.5 million times per day, meaning on average every 10 minutes.

Amazon has an estimated one billion gigabytes of data on their items and customers. This trove of information means they are in a unique position to know just how likely you are to purchase an item and at what price.

However, there are Amazon tracking tools that show how prices change on the website and help you get around the increases.

One website, Camelcamelcamel.com, allows you to set up email alerts for when prices drop and view the price history of a product. Another, pricerunner.com, allows you to search for your desired item and shows all the websites that stock the item and where to find the best price.

Pints

If you thought the price of a pint was bad enough, Britain’s biggest pub chain has added 20p to the price of a pint of beer at the weekend.

Stonegate Group introduced surge pricing at 800 of its licensed venues last September, as revealed by The Telegraph. The chain said this reflected the increased cost of washing glasses and hiring door staff.

The company operates around 4,800 venues in Britain, including well known chains Slug and Lettuce and Yates. Despite some of their venues increasing prices at the weekend, you can still take advantage of happy hours. For example, during the week Slug and Lettuce offer a 2-for-1 cocktail menu.

Gym/exercise classes

Gyms have also found a way to maximise their profits when demand falls. Chains like PureGym and The Gym Group both offer off-peak memberships which grant access at quieter times for a considerable discount. PureGym customers can save almost 25pc, £60 annually, by choosing an off-peak membership.

Another way to get around gym surge pricing is to find gyms in a less popular area. A Gymbox membership in Elephant and Castle, south London, is £120 cheaper per year than the same membership at its Bank branch in the heart of the City. However what they don’t tell you: It takes only five minutes on the Tube to travel between the two.

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