Valued added: How dynamic pricing shows we all have a price

On 31 August, Lauren went viral on X, formerly known as Twitter, after calling the price for the much-awaited Oasis reunion tour “a joke”.

Her screengrab of tickets selling at the eye-popping figure of £350 received more than 90,000 views and 120 retweets.

A month later, she is still livid about the situation, as she talks about the “disappointing experience” during our call. 

“It’s [dynamic pricing] creating a divide. Especially with the cost-of-living crisis, it just isn’t feasible to drop that money on one ticket,” the 20-year-old tells me.

Edinburgh resident Logan shares Lauren’s frustration. The long-standing Oasis fan was kicked out of the queue after being identified as a bot, only to jump back again, wait another few hours and find out the price was something he “could not justify”.

“Dynamic pricing is an evil practice and goes against everything that music stands for,” he says.

However, the pricing strategy, which involves charging customers different prices based on fluctuations in demand, is far from new. American Airlines was the first to introduce it in the 1970s, and since then it has found its way across most industries.

Yet, perhaps unsurprisingly, the strategy has become increasingly intertwined with technology, which is evolving rapidly – often too quickly to keep up with – resulting in it spiralling out of control. Fuelled by algorithms which feed on ever-growing troves of online data, dynamic pricing has shifted from a supply and demand approach based on the general market to one that will charge individual prices, simply because it knows there is a high chance you are willing to pay it.

The UK Government’s recent bid to investigate the strategy as part of its already planned review of ticket sales and consumer protection is not the first attempt at getting ministers to look into the matter. Almost a year before culture secretary Lisa Nandy said it was “depressing to see vastly inflated prices excluding ordinary fans,” then SNP MP for Linlithgow and East Falkirk Martyn Day brought the matter to the House of Commons. Day called for the UK Government to acknowledge the “unfairness of increasing prices to an unreasonable level”, and to “reconsider introducing further regulation”.

In his response, then minister for the creative industries John Whittingdale passed the buck to businesses, saying: “Ultimately, ticket pricing strategies are a matter for event organisers and ticketing platforms, providing they comply with relevant legislation.”

As Matt Grimes, senior lecturer in music industries and radio at Birmingham University, tells Holyrood: “At the moment, they’ll just keep kicking it into the long grass because they’re probably dealing with things that they consider to be far more important.”

He continued: “MPs clearly have been asked by their constituents, why is this happening? They’ve gone to parliament and brought that up. But unless there’s more consumer pressure, the government won’t really act.”

He’s not wrong, at least to an extent. Earlier this year US fast food chain Wendy’s was forced to backtrack on its plans to roll out dynamic pricing and AI menu features in 2025, after people expressed outrage at the new policy and threatened to boycott the business.

However, Grimes’s concerns about the technology-powered strategy go beyond consumer exploitation. Like Logan, he argues it has allowed sellers to maximise profits while disguising their actions as an attempt to save live events from scammers. He is referring to Ticketmaster’s claim that it adopted the model to discourage ticket touts as it allowed the firm to offer prices closer to “market value”.

By encouraging dynamic pricing to change consumption, we then have less emissions

And their concerns are not unfounded. Last year, research by the University of Oxford and Imperial College found that AI has allowed business to reshape dynamic pricing into a tool to retain their position of power, by placing consumers at risk of adversarial collusion. In other words, bigger firms might be able to afford better algorithms, which could manipulate weaker ones to reduce their chance to remain competitive, feeding into the monopolisation of markets.

David Eiser, director of analysis at Consumer Scotland, says: “In the whole Oasis debate, there were lots of things being conflated and dynamic pricing was getting all the criticism. But actually, the structure of that particular market was also part of the problem. You can have dynamic pricing in much more competitive markets, but certainly where a market is dominated by one or two major players, the ability of that organisation to monopolise that sort of technology is much stronger.”

Machine learning can sift through data at an unprecedented pace, allowing it to analyse and react in real-time to changes in our online behaviour. This means that AI-powered dynamic pricing can create not only a stressful experience for the buyer, but place sellers at odds with their transparency policies, as they may struggle to keep up with the unpredictable nature of the pricing strategy.

Dr Fan Lu, lecturer in marketing at Edinburgh Napier University, says: “It’s panic buying. You entice consumers with that urgency and pressurise them to make that decision. If you are in a shop, and a salesperson makes you feel that pressure, you probably walk away, but in this scenario where there is a limited time to make that decision or the price will go up, it is literally a kind of psychological manipulation.”

Alex Kemps professor of petroleum economics at Aberdeen University argues limits on the frequency of price changes could help solve the issue. He says: “Consumers are not financial people who are buying and selling stocks and shares. It is not reasonable to have prices jumping around every minute

“Suppliers should clearly clarify what the pricing policy is over a day or week, so consumers can reflect and decide.”

But the impact of unrestricted dynamic pricing runs deeper than a couple hundred pounds or extensive market control. 

Algorithms gather data that in today’s online era, some may argue has become too easy to get. We live most of our life online, we shop online, we book holidays online, we even date online and that leaves a very personal digital footprint.

Eiser explains: “What’s concerning is not necessarily just the fact that prices might flex in response to changes in market conditions, but that actually these algorithms know who you are effectively, as you log into a site, and are therefore adjusting their prices not based on the broader market conditions, which is what dynamic pricing is about, but actually about what these algorithms know about you as an individual and how you’ve expressed your preferences through your online behaviour.”

This means that the issue on the use of data extends well beyond dynamic pricing itself. As users, we move from website to website and we are continuously presented with the “consent” or “not consent” prompt. But who takes the time to read these agreements? More than half of British online users blindly accept cookies according to analysis from Scottish tech engineering firm Thales.

This allows dynamic pricing to operate based on what the chair of social marketing at Dundee University, Dr Thomas Anker, describes as “manufactured consent”, to segment customers based on price sensitivity.

He says: “We voluntarily give that consent, but we do that under circumstances that render that consent invalid.

“You may not have the time to read or to understand the terms and conditions and that’s a massive problem in terms of how they are potentially gathering personal data to feed the dynamic pricing algorithm and make that price fluctuate relative to your characteristics.”

Dr Lu adds: “You gain knowledge about customers, probably without them knowing it, yet the price you decide will impact them.”

She continues: “Consumers are kept in the dark and they should have more power. If they realise they are being targeted with different prices for the same product because of their behaviour, income, etc, they should have the legal right to withdraw that data.”

This affinity data, as experts call it, enables price discrimination, allowing the strategy to put revenue and ethics on a different footing.

It is literally a kind of psychological manipulation

Yet, interestingly, AI’s capabilities seem to have rendered data legislation obsolete. In 2022, a study by Zihao Li, a PhD researcher at Glasgow University, found affinity data, although it can lead to privacy invasion, is “hard to classify” as personal data, meaning that businesses can find a loophole in current data policies.

And before that, in 2015, it was revealed The Princeton Review was charging higher prices for its online tutoring services to those who lived in postcodes within large Asian populations, with prices varying by almost $2,000.

“Bias detection is absolutely crucial. When you have dynamic pricing, the price fluctuates relative to certain variables. Those variables may be inventory but there are also other types of variables which might be gender, race, sexuality, and so on,” Anker says. “And, when you start to use dynamic pricing relative to such protected characteristics, then you are building in unwanted bias into the algorithm, and quite often it happens through the back door.”

He adds: “We need to have a greater understanding of what are the circumstances under which an algorithm may unintentionally code for bias, and then be able to detect that.”

Yet, in the end, like most technology, the key lies in how it is implemented. If done correctly dynamic pricing offers benefits that go far beyond that of economic value. In the energy sector, for example, Professor Kemp argues it could help accelerate the drive towards just transition.

“You need the availability of electricity and gas capacity to meet high demand, which means capacity payments have to be made as part of the overall demand. So, by encouraging dynamic pricing to change consumption, we can then have less emissions.”

Similarly, it can also help make events more accessible. Last year, the Edinburgh International Festival introduced the strategy, stating that the additional revenue would allow it to offer more affordable concessionary tickets.

Dynamic pricing is here to stay. Yet the question remains: will it spark another round of regulatory catch-up, or can policymakers strike a balance between profit and fairness? The stakes are high, and the outcome could reshape how we engage with pricing in the digital age.