Surge pricing for theme parks, concerts: How real-time demand may affect fun time – and your wallet

SINGAPORE - Ms Rosemary Lum was eager to take her daughters, aged six and eight, to children’s theme park KidZania when it reopened on May 16. But when she went to book the tickets online, she saw that despite the ongoing promotion that slashed prices by half, a ticket for one child would still set her back by about $60.

“I was shocked to see the new prices,” said the homemaker, 43, who recalled that she paid about $60 for a standard child ticket to the theme park in 2019. “Hopefully the prices will drop when the crowds cease.”

According to KidZania Singapore’s website, dynamic pricing is applied for tickets to the theme park. This means that prices fluctuate based on real-time supply and demand, a strategy commonly used for flight tickets and private-hire rides such as Grab. 

In response to queries from The Straits Times, a spokesperson for KidZania Singapore said the dynamic pricing model allows the theme park to “manage demand more effectively”.

“By adjusting prices based on demand, we can balance visitor flow, avoid overcrowding and optimise the experience for everyone,” the spokesperson added. “It also provides flexibility for visitors to choose less crowded times at potentially lower prices. Visitors have the option to choose times that fit their budget, making it fair for everyone.  

“The pricing will be clearly indicated during the purchase process to ensure transparency.” 

The maximum price that a ticket can potentially reach is $120 and the number of tickets sold daily will be capped at 1,800. 

The fluctuating prices are expected to benefit Singaporeans, added the spokesperson.

“We do expect tourists to purchase tickets closer to their date of travel and, hence, pay a higher, more premium price to enjoy Singapore attractions.” 

The new pricing system did not faze some parents, such as Mrs Krystal Wee, who took her son, niece and nephew to the theme park on June 4. Her online bill came up to $389.70 excluding tax, with each child ticket costing $108.

“The child ticket is a lot pricier compared with other indoor playgrounds but I can understand it, given the size and staff needed,” added the homemaker, 37. “It was managed well with friendly staff. It was really empty when we went, with almost no queue for all the stations.” 

She decided against waiting for a lower price as she wanted to take the children to the park during the school holidays, which ended on June 23.

“It’s not quite possible to buy off-peak tickets as they have school on weekdays, and I think weekends might be considered peak periods too,” she said. 

Ms Sophia Heng, 42, recently took her nine-year-old daughter and 10-year-old son to KidZania twice – on May 18 and 30. 

“There’s no doubt that it’s expensive, but I still took my children there because it’s fun, educational, and different from just playing dress-up,” she said. 

She managed to snag discounted tickets for both dates. On May 18, a child ticket cost $54 and an adult ticket cost $32.85, excluding tax, while on May 30, they cost $49.80 and $30.29 respectively.

“Without the discount, it would be quite expensive, but it’s indoor and for a whole day of play,” she said. “I didn’t monitor the prices because I wanted to take my children there before the school holiday crowd. But if the prices fluctuate like Grab, then it’s no wonder people would complain.” 

Dynamic pricing in industries apart from transportation is not new. In 2011, concert giant Ticketmaster announced that it would look at ways to allow promoters to adjust prices according to demand. 

Dynamic pricing a boon or a bane?

Singaporeans were also subjected to fluctuating prices recently for Icelandic singer

Laufey’s upcoming sold-out show at the Singapore Expo on Sept 4,

where ticket prices were “subject to change in accordance with demand”, according to Live Nation’s website.

According to ticketing sites, the

musical Hamilton, which ran at Marina Bay Sands

from April 24 to June 9, made use of dynamic pricing. Local comedian Kumar’s upcoming show, Kumar Uncut, will also do the same.  

Ms Hana Callista, who bought two tickets for Laufey’s show at $216 each, said changing prices made it difficult to figure out how much money she actually needed to set aside for the concert. 

Before ticket sales started, she asked her parents to transfer her some money, lest she did not have enough to purchase the tickets. 

“Just imagine going into the ticketing site only to find out that the prices are much higher than you thought they would be,” said Ms Callista, 20, a polytechnic graduate. The ticketing website stated that prices for tickets started from $98. 

Dynamic pricing can help improve customer experience if done well, but high prices during peak periods might turn some away, experts told ST. 

With dynamic pricing, more people will be able to afford the product, said Professor Ioana Popescu of graduate business school Insead. 

“If a company were to charge a single price, that price might be so high that it would exclude certain people,” she said. With off-peak prices, those who would not typically pay for the product or service at its regular price can then get it for cheaper, she added. 

Lowering the prices along with demand will also increase the revenue of a business while satisfying customers, said Associate Professor Hu Zhenyu of NUS Business School.

“On days when demand is low, the facilities in the (KidZania) theme park are underutilised. At the same time, there may be customers who would like to go to the theme park but think the regular price is too expensive. In such cases, lowering the price can both improve the utilisation of the facilities and make the customers happier,” he added. 

But dynamic pricing is unlikely to benefit all customers, such as those who are less sensitive to prices and would be willing to pay higher prices, said Prof Hu. 

“Also, customers may question fairness and feel unsatisfied if the price fluctuations are large in a very short amount of time,” he added.

Frequent price changes might make it difficult for customers to plan their visits, and high-peak prices might come across as “unfair and discriminatory”, said Assistant Professor Li Xinlong of NTU’s Nanyang Business School.

“Effectively communicating the benefits and rationale of dynamic pricing to customers can also be challenging. If not done well, it could result in misunderstandings and negative perceptions,” he said. 

For KidZania Singapore, a membership or subscription strategy could be considered as a pricing alternative to balance visitor flow, said Prof Li. This would allow visitors the flexibility to visit at any time without worrying about individual ticket costs, and space out their visits instead of visiting only during peak periods. Members are also likely to take advantage of quieter periods.

“This model also fosters loyalty and repeat visits, ensuring a steady stream of visitors while maintaining manageable crowd levels, thereby enhancing the overall visitor experience,” he said. 

Alternatively, the theme park can also provide real-time updates on capacity levels and waiting times to allow visitors to better plan their visits. Guests can then choose less crowded times, ensuring a higher level of satisfaction and encouraging repeat visits, said Prof Li. 

Businesses should be “fair and transparent” when selling tickets so consumers can make informed purchasing decisions, said Mr Melvin Yong, president of the Consumers Association of Singapore.

He added that from Jan 1 to June 14, the consumer watchdog had received two complaints of event ticket prices falling after customers had purchased the tickets. 

“Companies should provide consumers with upfront information regarding event tickets, such as price, availability and easy-to-understand terms and conditions,” he said.

Who should use dynamic pricing? 

In February, American fast-food chain Wendy’s announced that it was planning to test dynamic pricing in the US in 2025, with its menu items differing in price depending on the time of day. 

After receiving backlash online, the chain explained in a statement that it was not planning to raise prices during busy times, but offer discounts during off-peak periods. 

Dynamic pricing would likely backfire in industries where price stability and transparency are crucial for consumer trust and satisfaction, said Prof Li. These include sectors such as healthcare and retail, particularly for goods such as groceries and pharmaceutical products. 

“Frequent price changes can lead to consumer frustration and perceptions of price gouging, especially for necessities,” he warned. 

Prof Hu said the strategy works best when resources, such as the capacity of a venue, are allocated over time, and customers value the products or services differently. 

This is seen in the airline industry, where seats are limited, he said. “Certain customers have tight schedules and value the seat highly, while others may accommodate many means of transportation and do not value the seat too much.”

Dynamic pricing could work well in industries such as hospitality, entertainment and e-commerce, said Prof Li. 

“Dynamic pricing... allows fans to pay premiums for high-demand events or better seats. Discounts for less popular times help attract more attendees, optimising revenue for event organisers,” he explained. 

“Online retailers like Amazon use real-time data to adjust prices based on competitor pricing, customer behaviour and inventory levels. This dynamic approach attracts price-sensitive consumers looking for the best deals, while helping retailers optimise profits.”  

Firms that choose to implement dynamic pricing must be technologically equipped to do it, said Prof Popescu.

“Doing it blindly without actually understanding the demand or testing it may be ineffective,” she said. “Having the data capability and analysis to check if it is actually working is necessary.” 

Ultimately, companies should not venture into dynamic pricing “simply because it allows them to make more profit”, she added.

“A pricing strategy has to follow the principle of dual entitlement, where both the company and customers are allowed some kind of benefit. I think that’s when it’s the healthiest.”