An Empty Seat And An Unsold Jumper Are Different Problems

Prices for travel, accommodation, events and appointments move in ways that seem erratic next to prices for physical goods. The difference is that the thing being sold stops existing at a particular moment.

Unsold capacity cannot be carried forward

A jumper that does not sell today is still a jumper tomorrow. A seat on a departed service, an empty room on a passed night or an unbooked hour is gone and cannot be added to next week's stock.

That makes the value of unsold capacity fall to nothing at a known instant. Everything about how such prices behave follows from that single fact.

A seller facing an expiring asset would rather take a small amount than nothing, provided the marginal cost of serving one more customer is low.

Marginal cost decides how low it can go

Carrying an extra passenger on a service already running costs very little. The vehicle, the crew and the fuel are largely committed regardless.

Where marginal cost is near zero, almost any price is better than an empty place, which is why late availability can be startlingly cheap in some categories.

Where marginal cost is real, the floor is higher. A restaurant giving away a table still buys ingredients and pays staff, so it discounts less freely.

Why prices rise as the date approaches instead

The opposite pattern is equally common, and it comes from who is left buying. Late buyers in many categories are travelling for work or dealing with an unavoidable event, and cannot easily walk away.

Sellers who can identify that pattern hold back capacity for it, because a late buyer with no alternative is worth more than an early one comparing options.

Which pattern dominates depends on whether the seller expects to sell out. Confident sellers raise prices late and doubtful ones cut them.

The same seat is sold several times over

Capacity is usually divided into buckets, each with its own price and conditions, and released according to rules set well in advance.

Restrictions attached to cheaper buckets are there to stop buyers who would have paid more from moving down into them. Advance commitment, non-refundability and awkward timing all serve that function.

Those conditions are the price of the lower price, which is why two apparently identical bookings can differ so much.

What it means for a buyer

Goods reward patience because the item persists. Expiring capacity rewards a decision about which risk to take, since waiting can end in either a bargain or nothing at all.

Flexibility about dates and times converts that gamble into something manageable, because it increases the number of buckets you qualify for.

Where the date is fixed and the trip is essential, waiting is not a strategy but an exposure, and the cheap bucket may never appear.