What Is Dynamic Pricing and Why Does It Keep Showing Up?
Everybody loves a good deal. Most of us know the thrill of finding a lower price right when we need it.
What’s tough is when that price changes, depending on who’s looking at it. Welcome to the world of dynamic pricing, also known as surge pricing or variable pricing, and, to no surprise, people have very strong feelings about it.
A recent NerdWallet study found that almost a quarter of respondents said they would boycott a business that uses this model.
The catch is that many of us may already be supporting businesses that use dynamic pricing without even realizing it. Avoiding it completely may be pretty impossible in this day and age.
What Dynamic Pricing Actually Means
At its core, dynamic pricing is a system where the cost changes based on supply and demand.
Most of us recognize this from ride-share apps on busy nights, but the model shows up in other places, as well.
Amazon uses it. Airlines have used it for years. If you’ve ever watched a flight price bounce around over a few days, you’ve experienced dynamic pricing in action.
Even everyday purchases, like gas, shift based on market conditions. Grocery store prices change with supply chain issues.
Experts say the idea isn’t new. We just have a label for it now.
Why It Feels Unfair
The frustration usually shows up when the pricing feels personal rather than broad. We tend to accept price differences when everybody in a group is paying the same amount.
What’s bothering people is the idea of a business looking at individual data, like browsing history or past purchases, and then adjusting the price just for them. That’s when concerns about a dynamic pricing controversy start to surface.
Experts say we can turn off third-party tracking or delete purchase histories if we’d like more control. The trade-off is losing personalized recommendations or discounts that come from those same data points.
Then it becomes a personal choice between privacy and savings.
Some industries have already tested the limits. Earlier this year, Wendy’s briefly floated the idea of adjusting the price of certain menu items, depending on demand, before walking it back after a wave of negative reactions.
Legal issues can also come into play. Dynamic pricing is allowed, but it crosses the line if it’s tied to protected traits like race or gender.
When People Are Okay With Price Shifts
We’ve all grown accustomed to surge pricing during peak travel times or high-demand events. Sometimes, it even helps us pay less if we’re able to travel during off-peak times.
In the NerdWallet survey, about one in four Americans said they would shop at a business with dynamic pricing, but only when the prices drop.
If you love to look for deals, there are tools that can help. People often use dynamic pricing apps to track gas prices or monitor airfare.
Flexibility also helps. When we’re able to shop or travel on non-peak days, we might be able to see a little savings.
Finding Balance as a Shopper
Experts say flexibility and awareness are key. We might pay more during a busy season, but we can also save during quieter times.
Sometimes, we can cast our vote with our wallet and our brand loyalty. Other times, we just need to buy what we need and adjust our budget elsewhere.
Still, the goal isn’t to avoid variable pricing completely. That’s becoming harder every year. Instead, understanding how it works might help us find moments where the system actually works in our favor.
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