Manj Devgon
3 minutes length
Posted: 10th December 2019

Could a Coca Cola vending machine hold the answer to busy season?

Could over-worked accountants struggling in busy season adopt a similar pricing strategy to Uber, low-cost airlines, and train operating companies? Or even one inspired by a Coca Cola vending machine experiment?

We’re talking about surge pricing – that is to say, charging more when demand is high and less when demand is low.

Or is there an alternative answer for practices who find they are overwhelmed by the volume of work?

Let’s explore these possibilities further.

How does surge pricing work?

With surge pricing, the idea is to manage the demand for a service rather than add more capacity. It’s a model used by budget air travel firms, train operators and Uber. There are times when the flights, trains are complexly full and other times when there are plenty of spaces.

Adding new planes or trains would be an expensive proposition especially when this would increase the number of empty seats during off-peak periods. Charging more at busy times and reducing costs at quiet times evens out demand and increases profitability.

You could look at is as being quite an old idea if you consider that it’s a similar principle to the ‘early bird specials’ – that offered a cheap restaurant meal deal at quiet times – going back to the 1920s.

Some have suggested surge pricing as a way to combat congestion on our roads. In fact, this has been implemented in Virginia, USA, where drivers are charged a variable price according to traffic levels during rush hour on one particularly key route.

Could surge pricing work for accountants in busy season?

You might argue this approach could be applied to other situations such as charging clients more for accountancy services during the busy season.

After all there is no reason why this work undertaken in January immediately prior to the January 31 deadline could not be done in December or November or October for that matter. 

In fact, there are ten months after the close of the tax year when the work could be completed squeezing this into the last few weeks of January makes no sense. It would be far better to encourage clients to engage earlier and spread out the work evenly across the year.

The challenge of course is in convincing clients this is a fair model.

The Coca Cola innovation

Coca Cola has tried some interesting ways of increasing price in its history.

In the early 50s, it tried – and failed – to convince the US Government to introduce a new 7.5 cent coin to allow it to raise its price without the logistical nightmare of changing its machines!

Then in 1999 Coca Cola tried surge pricing by designing a vending machine that on sweltering days would raise the price of an ice-cold Coke. However, there was a backlash against the idea and so the drinks giant had to think again.

Accountancy firms adopting such a model may also find themselves having to withdraw it in double quick time.

What’s accountants’ alternative to surge pricing?

If surge pricing is not the answer an alternative must be found. Let’s revisit the situation accountants face in January.

Practices find themselves with a significant volume of work that can overwhelm their capacity. Adding new staff for one month and having them underutilised for 11 months is impractical. However, IRIS may have an answer.

IRIS Resourcing now offers short flexible engagements that allows us to support you through the busy period without extending your financial commitment beyond.

Our trained team will complete routine accounts and payroll work without the costly overheads associated with additional staff – and for a limited fixed time. Our new fixed cost approach ensures you are in control of the purse strings.

Sound like a good idea? Think it could be helpful? Get in touch to find out more and see how we can tailor the service to address your practice’s unique and specific needs. Give us a call on 0344 844 9644 or email practicesales@iris.co.uk.