‘Don’t Look Back in Anger’ read the not-so-subtle headlines this time last year when Oasis and Ticketmaster faced backlash around dynamic pricing. The mechanism that, in theory, adjusts how much a product or service costs in real-time, based on market conditions and the familiar push and pull between demand and supply.

What had been a practice long associated with the travel and hospitality industries was suddenly pushed into the mainstream, raising pertinent questions around price transparency, regulation and consumer trust. Perhaps more telling is how dynamic pricing itself is becoming more commonplace, supercharged by digitisation and AI software capable of adapting prices in line with customer profiles or more general temporal factors, such as time of day or seasonality.

Businesses facing inflationary pressures and supply chain challenges may soon look to dynamic pricing as something of a necessity. A recent report by the Financial Times found between 25% and 30% of UK retailers now employ some form of the pricing practice, with sectors such as grocers, electronics and home improvement recording the fastest uptake. And it’s not all in the name of maximising revenue; platforms such as Wasteless are leveraging dynamic pricing to help reduce food waste by accessing data points around category and seasonality to offer discounts at an optimal time, often days before food is wasted.

Popularity varies by industry, of course. A brick-and-mortar corner shop is limited in how frequently it can update prices to either offer a premium price during peak periods, or stimulate demand when things are quiet, both in the interest of driving up revenue. Perched at the far end of this scale is Amazon which is reported to change product prices up to 2.5 million times a day.

It is perhaps the extreme example of dynamic pricing becoming more nuanced in the digital world, fuelled by data touchpoints including order history, inventory, competitor pricing and a consumer’s behaviour or activity, often without their express knowledge. Which is where issues of trust and regulation come to the fore.

Indeed, it wasn’t long after the resulting fallout from the Oasis ticket launch that the UK Government committed to an investigation into the matter. As part of a progress report released back in March, the Competition and Markets Authority (CMA) said it found zero evidence to suggest Ticketmaster deployed dynamic pricing for the band’s reunion shows. A stance taken by both parties from early on, when the mechanism was mooted as a way to control prices and clamp down on ticket touts.

Wholesale changes to law are unlikely, according to the CMA, yet its report did double down on the need for transparency. Dynamic pricing, on the face of it, may not be inherently problematic. What it does require is a degree of business responsibility and fair practice so as not to disadvantage consumers, particularly vulnerable groups who may feel confused or pressurised to make snap decisions on a product or service – be it a concert ticket or late-night taxi, a flight or a hotel – where the price has been inflated by those factors outlined above.

If dynamic pricing is indeed to become more commonplace, clear communication should be considered the first port of call, whether that involves educating consumers on the fluctuations in pricing, or simply presenting information more clearly at the outset of the buyer’s journey.

Since the days of barter and haggling, all pricing has been dynamic. An item or service may be valued either higher or lower, its cost dependent on not just demand, but product availability, market conditions, purchase windows and consumer segmentation. A more accepted scenario is how students and senior citizens can often avail of cheaper transport options for travelling off-peak.

By contrast, vendors may increase prices to a premium level for those customers able and willing to pay more. The question, then, is how far is too far? At what point do consumer trust and loyalty come under threat?

If nothing else, the CMA's investigation should serve as a cautionary tale to companies that use, or are thinking of using, surge pricing models. The move to a digital-first business model is inevitable in this world of increasing automation, yet the technology powering this new age of dynamic pricing requires a degree of oversight.

As far back as 2016, the fully data-driven approach utilised by Uber drew criticism for automatically surging taxi prices in response to demand rising at a moment of crisis: an intentional bomb explosion in New York City which injured dozens of people. Much has changed in the 10 years since, and no doubt the pricing technology will continue in its refinement, but such a glaring oversight points to the problem inherent in a fully automated system.

All told, it is nigh on impossible to predict the emergent variables that will influence the dual levers of supply and demand. All the more reason for close auditing and fair practice, so consumers of any industry don’t have to look back in anger, but rather can look forward with reassured calm to a future of better price transparency.