Dynamic pricing: Difference between revisions

(6 intermediate revisions by 3 users not shown)

Line 1:

'''Dynamic pricing''' is an umbrella term, which refers to a pricing strategy of modifying the price of a product or service according to market demands and/or consumer-identifying information. This definition includes '''surge pricing''', '''surveillance pricing''', '''demand pricing''', '''time-based''' '''pricing''' and '''variable pricing'''.

'''{{Wplink|Dynamic pricing}}''' is an umbrella term, which refers to a pricing strategy of modifying the price of a product or service according to market demands and/or consumer-identifying information. This definition includes '''surge pricing''', '''surveillance pricing''', '''demand pricing''', '''time-based''' '''pricing''' and '''variable pricing'''.

==How it works==

Line 8:

===Price discrimination===

~~According to~~ U.S. ~~law, "Price discrimination is illegal~~ if it is based on ~~impermissible factors like~~ race, gender, religion, or nationality~~. So stores can~~'t ~~charge men and women different prices for the same product~~."<ref>{{Cite web |date=25 Mar 2026 |title=Is Dynamic Pricing Legal? |url=https://www.findlaw.com/legalblogs/small-business/is-dynamic-pricing-legal/ |url-status=live |access-date=25 Mar 2026 |website=FindLaw}}</ref>

Price discrimination is illegal in the U.S. if it is based on race, gender, religion, or nationality, but doesn't prohibit price discrimination based other personal factors.<ref name=":2">{{Cite web |date=25 Mar 2026 |title=Is Dynamic Pricing Legal? |url=https://www.findlaw.com/legalblogs/small-business/is-dynamic-pricing-legal/ |url-status=live |access-date=25 Mar 2026 |website=FindLaw}}</ref> Companies aren't upfront about using other personal factors, because consumers don't like it when they find out they were charged more for the same products than the people around them.<ref>{{Cite web |last=Giansiracusa |first=Noah |date=26 Dec 2025 |title=Algorithmic pricing is scary. It doesn’t have to be. |url=https://www.bostonglobe.com/2025/12/26/opinion/algorithmic-surveillance-pricing-price-discrimination/ |url-status=live |archive-url=https://web.archive.org/web/20251227101111/https://www.bostonglobe.com/2025/12/26/opinion/algorithmic-surveillance-pricing-price-discrimination/ |archive-date=27 Dec 2025 |access-date=26 Mar 2026 |website=The Boston Globe}}</ref><ref>{{Cite web |last=Vedantam |first=Shankar |date=17 May 2016 |title=This Is Your Brain On Uber |url=https://www.npr.org/transcripts/478266839 |archive-url=https://web.archive.org/web/20250908175727/https://www.npr.org/transcripts/478266839 |archive-date=8 Sep 2025 |access-date=26 Mar 2026 |website=NPR}}</ref><ref>{{Cite journal |last=Chen |first=M. Keith |last2=Sheldon |first2=Michael |date=November 3, 2025 |title=Dynamic Pricing in a Labor Market: Surge Pricing and the Supply of Uber Driver-Partners |url=https://www.aeaweb.org/conference/2016/retrieve.php?pdfid=21740&tk=B3G8HTQB |journal=Labor Studies |archive-url=https://web.archive.org/web/20260301024619/https://www.aeaweb.org/conference/2016/retrieve.php?pdfid=21740&tk=B3G8HTQB |archive-date=1 Mar 2026 |via=Google Scholar}}</ref>

====Perceived fairness====

In 2016, a behavioral scientist that works at Uber made clear that the company could prove that people that people are willing to pay more when their phone batteries were low. Uber claimed they “absolutely don’t use that” information, but it's not legally prohibited, so consumers have to take their word for it.<ref>{{Cite web |last=Mahdawi |first=Arwa |date=13 Apr 2018 |title=Is your friend getting a cheaper Uber fare than you are? |url=https://www.theguardian.com/commentisfree/2018/apr/13/uber-lyft-prices-personalized-data |url-status=live |archive-url=https://web.archive.org/web/20260312173357/https://www.theguardian.com/commentisfree/2018/apr/13/uber-lyft-prices-personalized-data |archive-date=12 Mar 2026 |access-date=26 Mar 2026 |website=The Guardian}}</ref><ref name=":2" /> Price discrimination concerns have also been publicly remediated by claiming the usage of a practice known as "[[steering]]" instead. Steering is dynamically showing more expensive ''options'' based on individual consumer's characteristics, such as being a Mac user.<ref>{{Cite web |last=Kingsley-Hughes |first=Adrian |date=27 Jun 2012 |title=Mac Users Have Money to Spare, Says Orbitz |url=https://www.forbes.com/sites/adriankingsleyhughes/2012/06/26/mac-users-have-money-to-spare-says-orbitz/ |url-status=live |archive-url=https://web.archive.org/web/20250603093545/https://www.forbes.com/sites/adriankingsleyhughes/2012/06/26/mac-users-have-money-to-spare-says-orbitz/ |archive-date=3 Jun 2025 |access-date=26 Mar 2026 |website=Forbes}}</ref>

Not being able to objectively compare prices restricts a consumer's ability to perceive fair pricing. The ability to plan future purchases is also limited, because prices change constantly. From a consumer perspective, the unfavorable aspects algorithmic pricing can outweigh the ability to search and compare online that enables more choices.<ref name=":0" />

===Privacy concerns in digital marketing===

Dynamic pricing involves highly personal and identifying consumer data for individual price determination, which raises serious concerns about privacy.<ref name=":0" /><ref name=":1" /> ~~The problem stems from the collection of fine-grained consumer behavior data, as well as the~~ lack of transparency around that data collection~~. The driving force for algorithmic pricing models, especially personalized pricing~~, is tracking cookies. This data, which includes browsing activity such as clicks, and past page visits, as well as personal information entered on the site, can be used to finely infer the tastes, income, health etc. of the individual.

Dynamic pricing involves highly personal and identifying consumer data for individual price determination, which raises serious concerns about privacy.<ref name=":0" /><ref name=":1" /> There is a lack of transparency around that data collection, because often the consumer is ''not'' informed that:

~~Many consumers~~ are ~~unaware that this information is even being collected~~, and ~~merchants do not~~ have to ask explicit consent to ~~use~~ tracking cookies ~~for pricing purposes~~. ~~The onus~~ is ~~left to the consumer to protect themselves if they do not want to be targeted for personalized marketing. This data collection creates a massive~~ informational advantage ~~for~~ companies, which ~~may offset~~ the ~~price advantage that a~~ consumer ~~can gain due~~ to ~~the ease of searching~~ online. It also limits a consumer’s ability to plan future purchases, as prices constantly fluctuate. These ethically “bad” features of algorithmic pricing may limit the economic freedom of the consumer, even if the moral “goods” tend to enable more choices.<ref>{{Cite web |last=Egan |first=Shannon |date=5 Apr 2021 |title=Mapping the Ethicality of Algorithmic Pricing |url=https://montrealethics.ai/mapping-the-ethicality-of-algorithmic-pricing/}}</ref>

*The sites they have previously visited in their browser and their clicks are tracked to finely infer tastes, income and health status.

*Merchants don't have to ask explicit consent to adjust prices based on tracking cookies.

This is an informational advantage that companies leverage, which could limit the consumer's ability to objectively compare products online.<ref>{{Cite web |last=Egan |first=Shannon |date=5 Apr 2021 |title=Mapping the Ethicality of Algorithmic Pricing |url=https://montrealethics.ai/mapping-the-ethicality-of-algorithmic-pricing/}}</ref>

==Examples==

*[[Wendy's]] introducing dynamic pricing in 2025 for "getting more breakfast customers in".<ref>{{Cite web|url=https://www.npr.org/2024/02/28/1234412431/wendys-dynamic-surge-pricing|title=No, Wendy's says it isn't planning to introduce surge pricing|work=NPR|date=2024-02-28|first=Joe|last=Hernandez}}</ref>

==References==

==See also==

*[[Value based pricing]]

[[Category:Common terms]]

@@ Line 1: / Line 1: @@
 {{Stub}}
-'''Dynamic pricing''' is an umbrella term, which refers to a pricing strategy of modifying the price of a product or service according to market demands and/or consumer-identifying information. This definition includes '''surge pricing''', '''surveillance pricing''', '''demand pricing''', '''time-based''' '''pricing''' and '''variable pricing'''.
+'''{{Wplink|Dynamic pricing}}''' is an umbrella term, which refers to a pricing strategy of modifying the price of a product or service according to market demands and/or consumer-identifying information. This definition includes '''surge pricing''', '''surveillance pricing''', '''demand pricing''', '''time-based''' '''pricing''' and '''variable pricing'''.
 ==How it works==
@@ Line 8: / Line 8: @@
 ===Price discrimination===
-According to U.S. law, "Price discrimination is illegal if it is based on impermissible factors like race, gender, religion, or nationality. So stores can't charge men and women different prices for the same product."<ref>{{Cite web |date=25 Mar 2026 |title=Is Dynamic Pricing Legal? |url=https://www.findlaw.com/legalblogs/small-business/is-dynamic-pricing-legal/ |url-status=live |access-date=25 Mar 2026 |website=FindLaw}}</ref>
+Price discrimination is illegal in the U.S. if it is based on race, gender, religion, or nationality, but doesn't prohibit price discrimination based other personal factors.<ref name=":2">{{Cite web |date=25 Mar 2026 |title=Is Dynamic Pricing Legal? |url=https://www.findlaw.com/legalblogs/small-business/is-dynamic-pricing-legal/ |url-status=live |access-date=25 Mar 2026 |website=FindLaw}}</ref> Companies aren't upfront about using other personal factors, because consumers don't like it when they find out they were charged more for the same products than the people around them.<ref>{{Cite web |last=Giansiracusa |first=Noah |date=26 Dec 2025 |title=Algorithmic pricing is scary. It doesn’t have to be. |url=https://www.bostonglobe.com/2025/12/26/opinion/algorithmic-surveillance-pricing-price-discrimination/ |url-status=live |archive-url=https://web.archive.org/web/20251227101111/https://www.bostonglobe.com/2025/12/26/opinion/algorithmic-surveillance-pricing-price-discrimination/ |archive-date=27 Dec 2025 |access-date=26 Mar 2026 |website=The Boston Globe}}</ref><ref>{{Cite web |last=Vedantam |first=Shankar |date=17 May 2016 |title=This Is Your Brain On Uber |url=https://www.npr.org/transcripts/478266839 |archive-url=https://web.archive.org/web/20250908175727/https://www.npr.org/transcripts/478266839 |archive-date=8 Sep 2025 |access-date=26 Mar 2026 |website=NPR}}</ref><ref>{{Cite journal |last=Chen |first=M. Keith |last2=Sheldon |first2=Michael |date=November 3, 2025 |title=Dynamic Pricing in a Labor Market: Surge Pricing and the Supply of Uber Driver-Partners |url=https://www.aeaweb.org/conference/2016/retrieve.php?pdfid=21740&tk=B3G8HTQB |journal=Labor Studies |archive-url=https://web.archive.org/web/20260301024619/https://www.aeaweb.org/conference/2016/retrieve.php?pdfid=21740&tk=B3G8HTQB |archive-date=1 Mar 2026 |via=Google Scholar}}</ref>
+====Perceived fairness====
+In 2016, a behavioral scientist that works at Uber made clear that the company could prove that people that people are willing to pay more when their phone batteries were low. Uber claimed they “absolutely don’t use that” information, but it's not legally prohibited, so consumers have to take their word for it.<ref>{{Cite web |last=Mahdawi |first=Arwa |date=13 Apr 2018 |title=Is your friend getting a cheaper Uber fare than you are? |url=https://www.theguardian.com/commentisfree/2018/apr/13/uber-lyft-prices-personalized-data |url-status=live |archive-url=https://web.archive.org/web/20260312173357/https://www.theguardian.com/commentisfree/2018/apr/13/uber-lyft-prices-personalized-data |archive-date=12 Mar 2026 |access-date=26 Mar 2026 |website=The Guardian}}</ref><ref name=":2" /> Price discrimination concerns have also been publicly remediated by claiming the usage of a practice known as "[[steering]]" instead. Steering is dynamically showing more expensive ''options'' based on individual consumer's characteristics, such as being a Mac user.<ref>{{Cite web |last=Kingsley-Hughes |first=Adrian |date=27 Jun 2012 |title=Mac Users Have Money to Spare, Says Orbitz |url=https://www.forbes.com/sites/adriankingsleyhughes/2012/06/26/mac-users-have-money-to-spare-says-orbitz/ |url-status=live |archive-url=https://web.archive.org/web/20250603093545/https://www.forbes.com/sites/adriankingsleyhughes/2012/06/26/mac-users-have-money-to-spare-says-orbitz/ |archive-date=3 Jun 2025 |access-date=26 Mar 2026 |website=Forbes}}</ref>
+Not being able to objectively compare prices restricts a consumer's ability to perceive fair pricing. The ability to plan future purchases is also limited, because prices change constantly. From a consumer perspective, the unfavorable aspects algorithmic pricing can outweigh the ability to search and compare online that enables more choices.<ref name=":0" />
 ===Privacy concerns in digital marketing===
-Dynamic pricing involves highly personal and identifying consumer data for individual price determination, which raises serious concerns about privacy.<ref name=":0" /><ref name=":1" /> <!-- This next part is almost completely copied from the citation. Feel free to rewrite. -->The problem stems from the collection of fine-grained consumer behavior data, as well as the lack of transparency around that data collection. The driving force for algorithmic pricing models, especially personalized pricing, is tracking cookies. This data, which includes browsing activity such as clicks, and past page visits, as well as personal information entered on the site, can be used to finely infer the tastes, income, health etc. of the individual.
+Dynamic pricing involves highly personal and identifying consumer data for individual price determination, which raises serious concerns about privacy.<ref name=":0" /><ref name=":1" /> There is a lack of transparency around that data collection, because often the consumer is ''not'' informed that:
-Many consumers are unaware that this information is even being collected, and merchants do not have to ask explicit consent to use tracking cookies for pricing purposes. The onus is left to the consumer to protect themselves if they do not want to be targeted for personalized marketing. This data collection creates a massive informational advantage for companies, which may offset the price advantage that a consumer can gain due to the ease of searching online. It also limits a consumer’s ability to plan future purchases, as prices constantly fluctuate. These ethically “bad” features of algorithmic pricing may limit the economic freedom of the consumer, even if the moral “goods” tend to enable more choices.<ref>{{Cite web |last=Egan |first=Shannon |date=5 Apr 2021 |title=Mapping the Ethicality of Algorithmic Pricing |url=https://montrealethics.ai/mapping-the-ethicality-of-algorithmic-pricing/}}</ref>
+*The sites they have previously visited in their browser and their clicks are tracked to finely infer tastes, income and health status.
+*Merchants don't have to ask explicit consent to adjust prices based on tracking cookies.
+This is an informational advantage that companies leverage, which could limit the consumer's ability to objectively compare products online.<ref>{{Cite web |last=Egan |first=Shannon |date=5 Apr 2021 |title=Mapping the Ethicality of Algorithmic Pricing |url=https://montrealethics.ai/mapping-the-ethicality-of-algorithmic-pricing/}}</ref>
 ==Examples==
-{{Ph-T-E}}
+*[[Wendy's]] introducing dynamic pricing in 2025 for "getting more breakfast customers in".<ref>{{Cite web|url=https://www.npr.org/2024/02/28/1234412431/wendys-dynamic-surge-pricing|title=No, Wendy's says it isn't planning to introduce surge pricing|work=NPR|date=2024-02-28|first=Joe|last=Hernandez}}</ref>
 ==References==
 {{reflist}}
+==See also==
+*[[Value based pricing]]
 [[Category:Common terms]]