A recipe for being fleeced: 'dynamic pricing' is going too far

Well, then it’s just tough luck. That’s the beauty of dynamic pricing.

Dynamic pricing - online pricing that changes according to scarcity or level of demand - is becoming more widespread. At this time of year, it crops up when you book airline or ferry tickets, hire cars, holiday accommodation, festival tickets and a whole host of other things.

We’ve got used to it, but that doesn’t mean it’s fair.

You’ve probably had the experience. You browse the cost of, say, flights to a destination you’re thinking of visiting in a few months’ time. But you can’t book yet for some reason - you’re waiting for a hospital appointment to come through, say - so you leave it and go back a month later. By then, the price has risen ludicrously.

People can end up paying several times more if they book at the “wrong” time.

The defenders of dynamic pricing say that it gives consumers who do book early good deals.

READ MORE BY REBECCA MCQUILLAN

Deep state black ops and false flag plots: how to combat online crankery

“Back off – I’m not that kind of car” – the blight of bad driving and how to tackle it

But does it really? There aren’t many transactions in these post-inflationary days where people feel like they’re getting a good deal. Everything is so much more expensive than it used to be, it’s hard to know where the benchmark for “fair” even lies. Often, it feels as if the early bookers are getting the standard price while the late bookers are getting fleeced.

Disquiet about dynamic pricing has been growing. Music fans were affronted when none other than Bruce Springsteen – hero of the working man – sold some tickets for his US tour last year at eye-popping prices. Some were listed for sale at over $1000, reportedly going as high as $4000-5000 (up to £4000), with prices adjusted according to demand. Springsteen said he’d previously sold concert tickets at “under market value” but this time had told his team to “do what everybody else is doing, my peers”. If Ticketmaster didn’t sell them at that price, secondary sellers would, he reasoned, and then none of the profits would go to the band, but it rankled with fans. The average price was in “the mid-$200 range”, Springsteen’s manager pointed out (around £200).

But to many people, that’s really expensive. Message boards are awash with fans complaining about how pricey concert tickets have become.

Dynamic pricing keeps creeping into new areas. Even some pubs use it. Laissez-faire purists argue that it’s a beautiful thing because it allows adherence to the economic principle that everything is worth what someone is prepared to pay.

But what about the social dimension, where surging costs price large numbers of people out of certain products and services? Typically with concert tickets, one ticketing platform has the selling rights and the artist will often play only one date in a particular place. Consumers either have to take it or do without.

Concern about a lack of competition in ticket sales deepened in the US after the chaotic sale of Taylor Swift’s Eras tour tickets in 2022. In May, the US department of justice filed a lawsuit against Live Nation and its wholly owned subsidiary Ticketmaster, alleging monopolisation.

Whether or not to use dynamic pricing is a question that many venues wrestle with. They are still suffering from the loss of audiences and revenue caused by the pandemic, and this system is seen by some as a way to maximise income. Nothing wrong with that.

But here’s the rub. It may not maximise income sustainably. If venues want to be sustainable, they need repeat business. Yes, a punter might pay an inflated price through gritted teeth to see a certain show, but if you want them to come back, they need to feel they’ve had value for money. The higher the cost, the more difficult it is to guarantee that. If your seat is miles from the stage and there’s a 70ft queue for the loo, you might think twice about buying a ticket next time.

No one in the arts wants to be seen as elitist, but that’s a risk with dynamic pricing. Last summer, the Edinburgh International Festival introduced it, arguing that the additional income allowed it to put on free events and give lower priced concessions.

Dynamic pricing makes it difficult to judge offers (Image: Getty Images/iStockphoto)

Even so, it came in for some stinging criticism from regulars. Audience goodwill is at risk, particularly those in the squeezed middle where incomes may be modest but no concessions are available. These people are often the mainstay of live audiences. In a poll for arts consultancy Baker Richards in late 2022, four-fifths didn’t think it was OK to raise prices during busy periods. Three-fifths were OK with dynamic pricing if prices were dropping, but that’s not usually how it works.

Dynamic pricing is confusing and opaque. When’s the best time to book a hotel, to get best value? Is there any such thing as a “last-minute deal”? How much are prices likely to go up in a week? People often have no idea. It feels like all the power is with the seller.

The Fairer Finance think tank wants the Competition and Markets Authority to investigate. They argue that firms who use dynamic pricing need to be fully transparent so people can make informed choices.

For essential services like transport, how is it affecting average prices? How is access to arts and culture being affected? Could buying a pair of costly concert tickets make it hard for cash-strapped consumers to afford other goods and activities? Is there a danger of profiteering?

It’s hard to judge any more what’s a reasonable price to pay for things. Dynamic pricing makes it even harder. It’s time it was properly investigated.