News & Views

Dynamic pricing trends - Far from an oasis of calm

Over a million ticketholders have now rejoiced in the Oasis reunion concerts across the UK and Ireland, but when the tickets first went on sale, many were aghast at the price presented at the checkout, seemingly due to the application of dynamic pricing. Some might say they had their money’s worth. Some might not.

The Competition and Markets Authority (‘CMA’) has now issued the results of its investigation into the practices of Ticketmaster surrounding the sale of the Live ’25 Tour tickets. Whilst the investigation found no evidence of dynamic pricing, it did find that a ‘tiered pricing’ system of varying prices for tickets was being used. The ticketing giant has now agreed to provide more transparency and give at least 24 hours’ notice of the use of a tiered pricing system. The CMA’s view is that no consumer should acquiesce to bad practices.

So, what is dynamic pricing, and do you have to just roll with it?

Dynamic pricing

The term ‘dynamic pricing’ does not have a specific legal definition but, in essence, it relates to the practice of a business changing its prices swiftly in response to demand. In many ways, this is simply a 21st century application of ‘supply and demand’ but at supersonic speed. 

The effect was seen when an estimated 14 million people attempted to snap up the 1.4 million Oasis tickets for the UK and Ireland dates back in August 2024. It was assumed that dynamic pricing was responsible for seeing prices go up in the sky.

What are the pros of dynamic pricing?

For a business with a product of limited supply but in high demand, prices can increase without necessarily impacting sales. What’s not to love about that? Consumers who know how such pricing metrics work can use it to their advantage, for example, booking an early morning or late-night flight at a cheaper price than one during the middle of the day to slide away on holiday more cost effectively.

Conversely, a business can lower the price of a less-demanded product to undercut its competitors and secure more sales, whilst consumers can use comparison tools to scour the market for the best price and bring it on down.

What are the cons of dynamic pricing?

Whilst price changing is nothing new, technology improvements are increasing the speed at which this can happen, and this is where consumers can come unstuck. Asking a friend to talk tonight about a special holiday deal used to mean taking advantage of lower evening call charges, but that sort of delay in your decision-making nowadays might mean missing out as prices shift minute-by-minute. This creates a real risk for consumers, particularly if the pricing metric is not transparent.

What does the law say about dynamic pricing?

There are currently no specific laws that expressly address dynamic pricing. Instead, we look to the existing consumer protections that apply, i.e. requirements for transparency and fairness when it comes to a customer journey, and the absence of misleading or unfair practices. The Consumer Rights Act 2015 went a long way to consolidate many rules on this area and expressly prevents a business from being able to unilaterally change a price without notification. In the absence of a fixed price, the consumer should only pay a reasonable price. D'you know what I mean?

The latest business guidance around dynamic pricing

The CMA has recently published its conclusions from an internal project into the use of dynamic pricing. This is intended to provide more guidance around what it considers to be acceptable. Whilst this will not result in new laws per se, it’s not half the world away, and sets out what the CMA will consider as good practice:

• Consumers should be aware that dynamic pricing is being used and how it may affect prices, so they can make informed choices.
• Consumers should not feel pressured into make quick decisions because prices may rise suddenly.
• Vulnerable consumers should not be disadvantaged such that they pay higher prices than others.
• Dynamic pricing should not be used to obtain or maintain market power or reduce new entry into a market, which results in higher prices, lower output and harm to consumers, businesses, and the UK economy.

The CMA has committed to maintaining an ongoing review of the dynamic pricing strategies being applied across the digital markets and to proposing amendments to the laws or practices little by little.

What is the future of dynamic pricing?

Whilst there is currently no masterplan for there to be a specific set of laws relating to dynamic pricing, the CMA looks set to be the arbiters of what is and is not acceptable and they clearly have the Government’s ear. It will be important to follow the approach taken by the CMA as the Digital Markets, Competition and Consumers Act 2024 afforded further protections to consumers. The Act also expanded the CMA’s powers and remit to impose significant penalties in the event of the most serious breaches of consumer protections (see our earlier article).

Further advice on dynamic pricing

If your business wishes to operate a dynamic pricing model – as more and more are doing – it is important to seek specialist legal advice on your customer journey, website terms, contractual terms, and policies and adapt them to accommodate the changing landscape. After all, acting now to ensure you are compliant will mean you don’t look back in anger.