Coming to a Bar Near You: The Drink Exchange Puts Stock Spin on 'Dynamic Pricing'

Wall Street has arrived at your neighborhood bar. So, if you’ve never learned how to read the stock exchange, now might be a good — and fun — time to learn.

“It’s really a game, it’s a way to influence the happy hour, so to speak,” said Los Angeles-based software developer Todd Schram when describing his product, The Drink Exchange, in an interview with MSNBC.

Bar patrons watch a monitor that shows drink prices rotating in a fashion similar to the ebb and flow of the stock market. They also can follow along on their mobile devices.

They wait, and they watch, and when that red arrow is pointing down, it’s time to order that drink.

“It’s like the stock market, where high demand causes prices to rise and low demand causes them to fall,” said Frank Miller, manager of The Tipsy Crow in San Diego’s Gaslamp Quarter.

“The drink prices change based on real-time demand. So if people are buying a lot of Coors Light, Bud Light goes down in price.”

Miller decided to buy-in to The Drink Exchange, which outfits its customers with a point-of-sale system that uses an algorithm to incorporate sales data into what appears on the monitor screens. Thus far, he indicates no regrets. He’s happy with the interest it piques among customers, he told MSNBC for a segment of "Your Business."

For Schram, owner of The Drink Exchange, efforts are finally paying off. He said the company spent five years developing the system and the algorithm before its official launch in 2011.

“Much of the time was spent interviewing bar owners and patrons to analyze purchase behavior and patterns,” Schram told Patch. “The Drink Exchange is an amazing tool to promote product. While it benefits the bar with increased profits, the real benefit is for liquor distributors and manufacturers. It’s not uncommon for the sales of individual products to increase upwards of 500 percent simply listing it on The Drink Exchange.”

So how well has the product done?

“We’ve had 50 clients utilize The Drink Exchange over the past five years,” Schram said. “Currently we have about 25 installations ranging from California, to Hong Kong, to Florida. We even have a new client in India that will be up and running soon.”

Though its algorithm is complex, The Drink Exchange uses “dynamic pricing,” a phrase that is catching on but has always really been around.

It’s a simple concept, as an Associated Press article pointed out: Airlines have been using it for decades, as have theme parks such as Disneyland and Universal Studios. Their prices change based on seasons, days of the week, holidays, and of course, how many people are buying — or not buying — tickets.

It’s all in the timing.

(Photo courtesy of Todd Schram)