Why dynamic pricing is becoming the rule, not the exception

Changing prices for what the market will bear has long been a staple of pricing for everything from airplane seats to a gallon of gas to hotel rooms. Indeed, an entire field of so-called “dynamic pricing” exists to figure out how to extract the most profit from the most willing customers has now emerged. But we’re at an inflection point now in which such practices are going from the exception, and for relatively few items, to the norm. The regulatory framework is at the moment right in the midst of figuring out what the guardrails will be. 

The Intermediary Industrial Complex

Remember when a gallon of milk cost the same for everyone who walked into the store? That quaint notion is rapidly becoming as obsolete as the paper price tag itself. Retailers frequently use people’s personal information to set targeted, tailored prices for goods and services—from a person’s location and demographics, down to their mouse movements on a webpage. We’re witnessing the emergence of a pricing ecosystem where your browsing history, zip code, and even the speed at which you scroll through a web page can determine what you pay.

Companies like Revionics, PROS, and Bloomreach are building the infrastructure for a world where pricing becomes as personalized as one’s Netflix recommendations. The Federal Trade Commission found that the intermediaries worked with at least 250 clients that sell goods or services ranging from grocery stores to apparel retailers. This isn’t a niche practice—it’s becoming the operating system for modern commerce.

Consider this scenario from the FTC’s findings: A consumer who is profiled as a new parent may intentionally be shown higher priced baby thermometers on the first page of their search results. This opens the door to algorithmic exploitation of vulnerability. When your recent searches reveal a sick child, the system is programmed to catch you at the moment you’re likely to be least price-sensitive. 

The regulatory response is crystallizing around three distinct vectors. 

First, consumer protection law challenges the fundamental fairness of charging different prices to different people for identical products. The Robinson-Patman Act, dormant for decades, may find new life in addressing digital-age price discrimination. It was originally intended to help small vendors compete with large ones by forcing everybody to compete on the same playing field when it came to pricing, eliminating predatory pricing by large players. 

Second, those who support stronger privacy laws question whether using granular personal data for pricing decisions constitutes an unfair practice. The Electronic Frontier Foundation argues that predatory pricing is only possible because our privacy laws are so weak. Americans, they suggest, deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, for instance, charging higher prices to those already in the parking lot (as Target has been accused of doing) or to those with fewer alternative options, as Staples has been accused of doing. 

Third, antitrust concerns emerge as companies with the power and resources to engage in surveillance pricing may trigger competition concerns. Only the largest companies have sufficient data to perfect these systems, potentially creating insurmountable competitive moats. Further, the algorithms used to set prices can act as signals that allow firms to effectively collude, even if they don’t do so explicitly. 

With everything else becoming dynamic, perhaps the era of fixed prices is over

Here’s the strategic contradiction companies must navigate: The same data capabilities that enable personalized service—the holy grail of customer experience—also enable personalized exploitation. Every company talks about “customer-centricity,” but surveillance pricing reveals the tension between serving customers better and extracting maximum value from them.

Forward-thinking companies might find competitive advantage in explicitly rejecting surveillance pricing. “Same price for everyone” could become the new “organic” or “fair trade”—a trust signal that commands its own price premium. Costco’s membership model already embodies this principle: pay to enter a space where prices are transparent and universal—and Costco has long set a ceiling on how much margin it extracts from its member-customers. 

We’re in a brief window where surveillance pricing is technologically possible but not yet legally constrained. Companies experimenting with these tools should assume that window will close—the only question is how quickly and how completely.

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