Making True Real-Time Parking Pricing a Reality

The ability to determine how to price parking accurately and effectively has evolved significantly in recent years. However, most would agree that parking is still largely underpriced, and spaces undervalued. Why? Because rates and rules for parking are often determined by data gathered either empirically or by viewing historical trends to make choices for future rates. The inherent problem with either approach to rate policy is that data compilation is broad, does not necessarily lead to action, and will not keep pace with the growing complexities of the curb. Furthermore, they do not reflect an accurate, real-time demand of the curb that changes dynamically by the day or even down to the hour.

Can the parking industry apply true dynamic pricing?

It’s understood that the concept of dynamic pricing for parking is not new. It’s also understood that where it has been implemented, the results have been generally positive. For example, Washington, DC’s Chinatown pilot project reduced the time motorists spent searching for a parking spot by seven minutes per trip. San Francisco’s pilot reduced driver “cruising” by 50% and decreased double parking by 22%. The City of Seattle’s pilot resulted in increased meter pricing in four districts, but price reductions in 11 districts. And in New York, 61% of drivers in the Greenwich Village pilot found parking became easier or remained the same as pre-pilot (parkDC: Penn Quarter/Chinatown Parking Pricing Pilot January 2019; Donald Shoup, The High Cost of Free Parking).

However, perhaps we should take a step back, re-examine the strategy, and ask, “Can improvements to this strategy lead to dramatic, measurable, and positive results?” The answer is a resounding yes when combining existing strategies with new technologies that have entered the market recently. These technologies offer the ability to make true dynamic pricing a reality while simultaneously managing the curb. Hence, Dynamic Pricing 2.0. But first, let’s define dynamic pricing for those that may not be familiar.

Dynamic pricing can be defined as “a pricing strategy that ignores fixed pricing and applies variable pricing.” In other words, it is a strategy in which the price of a particular product tends to change in response to demand and supply. Powered by intelligent software, this strategy is embraced by hotels, airlines, and utilities because it allows their rate engines to price their products according to supply and demand, in real-time. Can the parking industry apply the same software driven strategy to its parking spaces? Yes!

In fact, the parking industry is ripe for Dynamic Pricing 2.0, and as mentioned previously, already has the technology to make this a reality. The evolution of dynamic pricing from 1.0 to 2.0 hinges on the use of a rate engine that ingests occupancy and payment data (via API or CDS) as its primary inputs that inform business rules to calculate and share real-time pricing (via API or CDS) as output to the market. In addition to the dynamic parking rates this model provides, organizations can also look forward to dynamic wayfinding that encompass the parking eco-system (garages, lots, on-street), as well as EV spaces and loading zones. Moreover, a natural outflow of this model includes the automation and consolidation of operational processes such as enterprise statistical analysis and reporting (occupancy/utilization/payments), driver guidance, compliance and enforcement, and others. Lastly, this model is inclusive of the Curb Data Specification (CDS) developed by the Open Mobility Foundation and its membership. In short, CDS allows cities to digitally represent their curb space, communicate with curb users in different ways, and use metrics to improve those curbs.

Benefits

The benefits of traditional dynamic pricing and curb management are well documented via various research organizations such as the Institute of Transportation Engineers, Urban Freight Labs, and others. From their collective research, benefits include:

• Congestion improvements: less double parking improves traffic flow.
• Climate improvements: reduced emissions from less circling.
• Business improvements: less searching means more shopping.
• Overall improvement in the quality of life.

Keep in mind that while attractive, these benefits were gained and exist with status quo strategies and technology. The adoption of Dynamic Pricing 2.0 amplifies the effectiveness of the existing strategy because it considers all aspects of the parking ecosystem and responds accordingly. As a result, the previously identified research-based benefits can now reach peak potential as the upgraded strategy is combined with focused technology and scaled across the parking ecosystem.

Challenges and Solutions

Currently, there is a political tailwind due to the Biden Administration’s SMART Grant for “projects focused on advanced smart community technologies and systems in order to improve transportation efficiency and safety.” However, parking and transportation professionals will still need to contend with the usual suspects of procedure and perspective on the road to the adoption and implementation of Dynamic Pricing 2.0. Regarding procedure, the issue of how to communicate rates for on- and off-street spaces to the driving public is a core challenge to be overcome before Dynamic Pricing 2.0 can be implemented. Fortunately, through digital messaging signs (DMS) changes to rates, rules, and curb uses can be reflected in real time through the CDS coming from the rate engine. In essence creating a “flex curb” with embedded dynamic pricing.

Regarding perspective, the core challenge revolves around how Dynamic Pricing 2.0 is viewed through the eye of a public wary of a new “money grab.” However, precedent shows us that through the methodical education of stakeholders, perspective moves from money to the aforementioned benefits. Now through these technologies and a comprehensive approach, we can deliver elevated benefits that directly contribute to the quality of life that we desire for our fellow citizens.