5b07

SOCIETY

2026 May 14, 15

Level: High

Dynamic Pricing

by Elizabeth Koroma

More and more prices are changing hour by hour

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Businesses have always set prices for goods and services based on a wide array of factors including how much demand they expect, the prices their competitors charge and the cost of production. But some of these factors can change rapidly, and today’s technology allows businesses to change prices just as rapidly. This possibility has led many businesses to adopt a strategy called dynamic pricing, in which they adjust the prices of goods and services frequently. This model benefits businesses, and consumers may be able to use it to their advantage, but it also raises ethical and practical concerns.

  With advances in computing, it is now feasible for businesses to adjust prices continually in response to ever-shifting factors. This helps companies to manage their inventories, lower prices when they need to use goods up and raise prices when they can to maximize profits.

  The transportation industry has used forms of dynamic pricing for decades. Airlines offer lower prices on days when fewer people travel and raise prices as the travel date approaches. Uber’s surge pricing, another form of dynamic pricing, increases the cost of rides at times when the most customers want to travel. But this also spurs drivers to accept jobs at these times, thus making more rides available. And now companies in other industries are using dynamic pricing as well.