The Competition and Markets Authority (CMA) has published an update on where it believes dynamic pricing can be used fairly, and where risks can arise.
The practice of dynamic pricing – where prices are rapidly and frequently adjusted in response to demand – is growing in popularity as technological advances are making it quicker to implement. In response, the CMA has conducted a review, publishing a policy paper and complementary list of tips for businesses.
Overall, the paper states that dynamic pricing can benefit companies by enabling them to make better use of their capacity, while consumers can benefit from a better deal if they understand when prices are likely to be lower. The paper also highlights that there can be poor outcomes in some circumstances. The risk of poor outcomes is increased when:
- Consumers are not aware that dynamic pricing is being used
- Consumers feel pressured to make quick decisions
- Vulnerable consumers misunderstand the practice and end up paying more
- A company uses dynamic pricing to obtain or maintain market power or reduce competition
Read the Tips for businesses using dynamic pricing on the CMA website.
