There’s nothing new about dynamic pricing. Beachside ice-cream shops always increase prices over summer. Airfares during school holidays are traditionally eye-watering. And Tuesday nights have long been cheaper at the cinema, for good reason.

However, things are different these days because technology and data enable real-time price changes, says Professor Nitika Garg, associate dean (accreditation, rankings and enhancement) at UNSW Business School.

“We’ve had dynamic pricing since we’ve had the ability to understand macro factors like demand surges and seasonal changes,” Garg says. “Businesses have tried to be more deliberate in their strategies and maximise revenues to reflect those changes in the market.

“Over the years, though, marketers have become better at collecting information about us. They probably know more about us as consumers than we do. They’re able to predict consumer behaviour in real time by using technology.”

That is leading to a new type of dynamic pricing. It’s one that is less transparent and that can leave customers feeling as if they’re being targeted and fleeced.

Consider concert tickets. Businesses such as Ticketmaster and Ticketek, and the artists whose concert tickets they have been selling, have come under fire after a spate of dynamic pricing events.

In Australia, hundreds of dollars were added to ticket prices for recent Green Day, Pearl Jam and Lady Gaga concerts. The originally advertised prices were not even close to what fans eventually had to pay to see their favourite artists perform.

Across the Tasman, fans buying general admission tickets for singer SZA’s Auckland shows in 2024 could initially get one for NZ$250, but this rose to NZ$550 as demand grew.

In the UK, Oasis faced a backlash after similar increases for their reunion tour.

It’s not just music fans suffering at the hands of AI bots. Tennis and motorsport fans felt the same sting when tickets for the Australian Open and Australian Grand Prix went on sale.

Pricing policy can damage brand

The potential short-term increase in profit in such cases must be weighed up against long-term brand and reputational damage, Garg says.

“From the business perspective, they have higher profit margins,” Garg says. “But the flipside is that it can break consumer trust and erode brand equity. This can have long-term repercussions.”

The modern-day problem, she says, is that the pace and immediacy of significant price rises, which often happen right in front of customers’ eyes, make those rises seem unfair and personalised.

Many have had the experience of looking at the cost of air tickets then quickly visiting other sites to compare prices, only to return minutes later, ready to purchase, to find dramatically increased prices on the original site.

“There is a sense that businesses are misusing personal information to skim even more profit,” Garg says. “Sometimes, it’s because the brands know that particular people can afford, or are willing to pay, a higher price.”

So, we assume that rather than the beachside ice-cream parlour charging more because it’s a warm summer evening, they’re instead charging one family higher prices because data tells them that family drove to the beach from a higher socioeconomic area and in a more expensive car.

Can dynamic pricing be banned?

Australian Prime Minister Anthony Albanese and Treasurer Jim Chalmers have announced plans to ban unfair trading practices that increase cost of living, including what the government described as “specific prohibitions of a range of dodgy practices”.

These practices, the government says, include subscription traps, drip pricing and dynamic pricing.

“From concert tickets to hotel rooms to gym memberships, Australians are fed up with businesses using tricky tactics that make it difficult to end subscriptions or add hidden fees to purchases,” Albanese and Chalmers said via media release.

That led to a consultation paper being released around the design of such changes, including the empowerment of “the Australian Competition and Consumer Commission and state and territory agencies to pursue breaches of consumer guarantees and supplier indemnification provisions”, a report in The Conversation said.

“This is where the regulation really has to hurry up,” Garg says. “Regulation has always lagged innovation. But this is another example of how technology is advancing businesses in directions which might not necessarily be ethical or fair to consumers, and where there is no clear policy guideline in place.”

Could accountants use dynamic pricing?

What if accountants charged more during the months around end of financial year, when their services are in far greater demand?

What if they asked more from wealthy clients and businesses to help fund work they do for charities, or with individuals or businesses that otherwise couldn’t afford such representation?

Dynamic pricing could help firms:

• Optimise capacity by shifting some work to quieter periods

• Price urgency when clients request last-minute work

• Reflect expertise in niche or high-demand areas.

If you are not making the consumer completely aware of the logic and purpose of the pricing, the process will probably backfire, Garg says.

“If you’re not disclosing to the consumer that this is actually happening, it will likely be considered unethical,” she says.

“It might be considered an abuse of personal information. It might be that they have not implicitly agreed to such charges. So, unless you are making consumers aware of how and why you are engaging in these practices, it won’t likely succeed.”

But if you communicate clearly and well, the concept might be understood and better received.

“You’re giving options,” Garg says. “That’s something we appreciate and that we’re familiar with. When we stay at a hotel, for example, we know we can help the environment and perhaps save on the bill by not having towels and sheets changed every day. If the choice is voluntary, it doesn’t feel as if we’re being hoodwinked.”

The problem with dynamic pricing right now is that it can feel as if we’re being hoodwinked. Unlike the times we enjoy a refreshing summer ice-cream, that can leave a very nasty aftertaste.

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What is dynamic pricing?

Dynamic pricing is a strategy where businesses change a product’s price based on various factors like demand, competitor pricing, inventory levels and seasonality. For example: airfare prices going up during school holidays and cheap Tuesdays at the cinema.

Is dynamic pricing legal in Australia?

Last year, the federal government announced it will ban dynamic pricing, a controversial tactic which drives prices up when demand increases, following a Four Corners investigation, according to the Australian Broadcasting Corporation. However, as of May 2025, under Australian consumer law it is still legal for retailers to change prices to reflect demand and supply in the market. Dynamic pricing isn’t illegal if the business is not misleading about the price you have to pay at the point of sale. In saying that, while legal, it is not necessarily the most fair practice, and the Australian Government has acknowledged that.

Is dynamic pricing legal in New Zealand?

Similarly to Australia, dynamic pricing is legal in New Zealand but businesses must comply with the Fair Trading Act by being clear and transparent about the final price, to consumers to avoid misleading or deceptive practices.

What is price surging?

Surge pricing is a type of dynamic pricing where prices increase only during periods of high demand and limited supply. Dynamic pricing is a broader strategy and covers price changes based on other various factors like time, competition, market conditions and customer behaviour.

What is price gouging?

Price gouging is when prices change in response to a crisis or shortage, exploiting public desperation.

What are the advantages and disadvantages of dynamic pricing?

The potential short-term advantages are an increase in profit, however disadvantages are long-term brand and reputational damage.