Consumer affairs

Variable pricing refers to a pricing strategy where the price of a product or service is not fixed but instead fluctuates in accordance with various factors, such as demand, time, or customer segment. Variable pricing is possible because different customers are willing to pay different prices for the same product or service, depending on their individual circumstances and perceived valued.

Variable pricing relies on data analytics. Businesses will analyse past sales data, consumer behaviour patterns, and market trends to determine optimal pricing points and maximise their revenue. For instance, airlines and train companies employ variable pricing by adjusting ticket prices based on demand and time until departure.

Dynamic pricing

Dynamic pricing (also referred to as ‘surge pricing’ and ‘real-time prcing’) is a form of variable pricing. This strategy involves adjusting prices in real-time based on current demand and supply conditions. Businesses tend to use dynamic pricing because it allows them to capture a greater proportion of people’s willingness to pay for a product. It helps them to increase their total revenue.

According to the Competition and Markets Authority (CMA), dynamic pricing is becoming increasing prevalent across different markets and sectors (such as travel, hospitality, entertainment, and online retail). Dynamic pricing is not unlawful – consumer law does not generally prohibit particular pricing strategies. However, in certain circumstances dynamic pricing may breach consumer protection law.

Recently, the CMA’s attention has focused on Ticketmaster’s pricing of Oasis concert tickets. Following a formal investigation, the CMA found that Ticketmaster did not use a responsive algorithm to dynamically price tickets. However, as part of this investigation, the CMA was prompted to consider whether dynamic pricing is in the interests of consumers.

The backdrop to the CMA’s scrutiny of dynamic pricing has been the introduction of the DMCCA. This act made significant changes to the UK’s competition law and consumer protection regimes.

Secondary ticketing and supermarket pricing

With regard to variable pricing, the CMA has investigated the secondary ticketing market and supermarket loyalty card schemes.