What to Know About Dynamic Pricing — and How to Beat It
From airlines to food-delivery platforms, many businesses use high-tech strategies to adjust their prices online.
The only constant in life is change, the Greek philosopher Heraclitus famously said. When it comes to prices for goods and services online, sometimes the changes happen so fast it feels as though the ground is moving beneath you, whether you need a ride home and Uber fares double in a matter of minutes or the price for an airline ticket you’ve been eyeing for a much-needed vacation skyrockets overnight.
These shifts come courtesy of a strategy known as dynamic pricing. Often shaped by algorithms that work behind the scenes, prices fluctuate to maximize the seller’s profits.
Dynamic pricing is nothing new, but the growth of online shopping and developments in artificial intelligence have made it far easier — and far more common — for companies to deploy it frequently and across a wider range of purchases, from groceries to clothing.
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Demand is a common driver of dynamic price changes. Prices may, for example, rise in anticipation of increased demand at certain times of the day or week, or when an item is selling quickly. Competitor pricing can have an effect, too, with businesses tracking what rival retailers are charging and altering their prices to match or undercut them.
In some cases, in a practice known as personalized pricing, even factors such as a customer’s location or browser history may influence the prices they see.
Where dynamic pricing happens
Airlines have long employed dynamic pricing. Algorithms constantly compare real-time sales to forecasts. If some seats are selling more slowly than expected, prices may drop. Likewise, if sales are beating expectations, prices rise. And seats are commonly grouped into “fare buckets,” meaning that a certain number of tickets are allotted to be sold at a certain fare, and when the cheapest bucket sells out, the price jumps.
Airlines may sell “200 seats at 200 different prices,” depending on when and how travelers book them, says Scott Keyes, founder of Going, an app for flight deal alerts.
Hotels and ride-hailing apps, such as Uber and Lyft, use dynamic pricing, too. An event such as a local conference, concert or weather disruption can boost demand for hotel rooms and raise prices as much as 40% or 50%.
During rush hour, bad weather or major events, ride apps may double or triple fares. Ticket prices for concerts, sports matches and other events may fluctuate depending on demand, especially via third parties such as Ticketmaster.
A run of victories for Serena Williams at the U.S. Open in 2022 caused prices for her final match to surge to historic levels — by as much as 143% in just 24 hours.
For the first time, FIFA is implementing dynamic ticket pricing for the 2026 World Cup, using AI to analyze demand in real time to adjust prices.
Increasingly, food-delivery platforms are making use of dynamic or personalized pricing tactics. In December, Consumer Reports published an investigation showing that Instacart had quietly been running AI-driven price experiments that could show different Instacart users different prices for the same grocery items at the same stores at the same time, with variations as high as about 23% on some products.
After the report was released, lawmakers and consumer advocates called for investigations, and within weeks, Instacart announced it would end the AI price tests. Still, many delivery platforms continue to allow surge pricing during times of peak demand.
Major online retailers — the likes of Amazon, Target and Walmart — deploy algorithms to optimize profitability, too. “Any major national brand will likely engage in some form of dynamic pricing these days,” says money-saving expert Andrea Woroch.
Many merchants use advanced pricing technology that monitors demand, competitor price changes and other factors to automatically update prices.
How to thwart dynamic pricing
You may not always be able to beat the algorithms at their game, but you can shop smarter by making these moves.
1. Pay attention to the timing. For airline tickets, booking within “Goldilocks windows” — periods not too early and not too late relative to your travel date — can help you avoid unfavorable dynamic pricing. For domestic travel during off-peak periods, the best deals typically appear one to three months in advance, while peak-season domestic flights are more likely to be cheapest three to six months ahead.
For hotels, book one to two months before your planned check-in date to get the best prices and availability. Or, if you’re flexible, you can often find good deals by waiting until the last few days before checking in to a hotel in a larger city.
Concertgoers may benefit from buying at the last minute, too. On resale sites, they spend 33% less than average when purchasing tickets the day of a concert and 27% less than average the day before, according to a study by FinanceBuzz.com.
Similarly, try to shop online during windows when retailers may drop prices. A study from data-gathering platform Decodo (formerly Smartproxy) found that with online retailers, prices tend to be lower from 6 am to noon, and that Tuesday mornings are particularly favorable for shoppers. Shopping on weekday mornings, rather than evenings or weekends, might give you an edge.
2. Leave no trace. A common piece of advice to defeat personalized pricing is to clear your web browser’s cookies, which store data about your activity online. (Go into your browser’s settings and look for an option such as “clear browsing data” or “remove website data.”)
When you turn on incognito or private mode, your browser doesn’t save your search history and deletes cookie data when you end the session. If a merchant is using your location or browsing history to adjust prices, these tricks might be effective.
But they have limitations. When it comes to purchasing airline tickets, for instance, using them is the equivalent of “doing a rain dance” — it’s harmless, but it doesn’t cause prices to move, says Keyes. And in most retail settings, businesses are actually more likely to offer you a discount on items you’ve viewed but not purchased, he says.
You can leverage this by adding an item to an online shopping cart, then closing out of the website or app. Later, you may get an e-mail offering you 10% to 15% off on that item.
3. Shop around. Deal-finding apps and browser extensions can help you watch prices and send alerts when they drop. CamelCamelCamel for example, tracks price history on Amazon. Sites such as Google Shopping and Slickdeals will notify you when an item you’re monitoring goes on sale. You can track airfares and hotel rates using price alerts with Google’s tools, or use the price-tracking features from Hopper or Going.com.
If you’re shopping online with a retailer that has brick-and-mortar stores, compare the in-store price for an item with its price online.
For example, Target sometimes offers lower prices on its website than in-store. But it also matches prices; if you find that a product you want to buy in the store is cheaper on Target.com, you’re often able to pay that lower price at checkout, if you ask.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
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