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POV: No clear winner yet in price tug-of-war between tech disruptor firms and consumers

Keeping prices high for longer than justified may be good for the top-line figures of tech firms. But it may also ripen the market for the next wave of disruption and open the door for new competitors. The consumer may still hold the trump card in the price tug-of-war.

Tech firms like Grab (left) and Netflix (right) have raised the prices of their services over the recent months.

Tech firms like Grab (left) and Netflix (right) have raised the prices of their services over the recent months.

A Facebook user commented something to this effect on TODAY’s recent Big Read about tech firms like ride-hailing and food-delivery platforms raising their service prices: Every monopoly today was once an industry disruptor.

His remark loosely describes how these firms have pivoted from expanding their user base to chasing profitability as their market shares solidify.

Experts say economic conditions like rising interest rates and inflation have also hastened the inevitable transition.

But this shift has made things tougher for customers who also have to grapple with other skyrocketing costs.

As price-takers, many consumers may feel they can’t do much in an oligopolistic market.

But one can always choose to forgo some conveniences to reduce spending, especially on non-crucial services.

Cut down on ride-hailing, walk out to buy or cook one’s own meal, or watch less streaming content.

These adjustments make things easier on the wallet, with benefits too: Lower carbon footprint, more footsteps in one’s health app, and more time to spend on other hobbies.

Not to forget, competition laws and consumer watchdogs will help deter any attempts of profiteering.

As for the firms, they would still need to do their best to retain consumers, even if they can ill-afford a price race to the bottom.

Some ways include maintaining high service levels while protecting the welfare of gig workers and interest of partner merchants, which are issues that more consumers are beginning to care about.

It would also be good for these firms to continuously innovate and also diversify into new ventures with thicker profit margins.

Besides being able to fund more price-sensitive business units, it helps to buffer their overall business against future shocks.

When faced with headwinds such as rising energy prices, some disruptor firms have shown agility by quickly hiking up fares so their partner gig workers can maintain a decent earning.

But just as importantly, they must show they are as responsive to adjust fees downwards when costs of energy and capital dip, to retain market share.

Keeping prices high for longer than justified may be good for the top-line figures of tech firms.

But it may also ripen the market for the next wave of disruption and open the door for new competitors.

The consumers do still pull some weight in the price tug-of-war.

Related topics

grab Netflix consumer prices inflation POV

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