A Bar With Dynamic Pricing

The laws of supply and demand are one of the basic tenets in traditional economics.  In a nutshell, all other things constant:

• If supply stays constant and demand increases, prices will go up.   

• If supply stays constant and demand decreases, prices will go down.

Pretty simple, right?   

Apparently, a bar in California is using these concepts.  Prices for drinks change constantly, based on demand, meaning popular drinks go up in price and unpopular drinks go downs in price.

I have recently been thinking among similar lines about the price model for online media, such as music tracks, movies and others.  For example, should the price of downloading a popular song be the same than an unpopular one?  On the other hand, if a popular song is worth US $3 instead of US $1, what could be the unintended consequences?

Back to the dynamic pricing bar example, I would assume that people would shift to unpopular drinks when the price of popular ones are increased.  But after a few drinks, can someone still control their decisions?


So, can you use a dynamic pricing model based on current demand?  What would be the unintended consequences?