What is dynamic pricing and is it legal?

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Published on LexisPSL on 18/10/2017

The following TMT Q&A provides comprehensive and up to date legal information covering:

  • What is dynamic pricing and is it legal?
  • What is dynamic pricing?
  • What are the legal issues?

What is dynamic pricing?

Dynamic pricing is a pricing strategy in which businesses set flexible prices for products or services based on current market demands. The price changes are carried out by software which collects data and uses algorithms to adjust pricing according to business rules. Those business rules take into account factors such as the time of day, or day of the week; the customer’s location, the level of demand for the product or other prices in the market. It might also depend on other factors such as the weather on a given day. This analysis is often designed to give businesses the best price yields possible at any given time. Examples of where it is widely used are transport, eg air fares, and Uber taxi fares. It also takes place on websites such as Amazon. On high volume sales days such as Black Friday, prices may change multiple times during the day.

What are the legal issues?

In principle, organisations can effectively charge what they like and what the market will bear. However, there are some legal constraints on the freedom of traders to engage in dynamic pricing techniques.

Equality Act 2010

Businesses may not discriminate on price in relation to any of the protected characteristics under the Equality Act 2010. See Practice Note: Equality Act 2010—discrimination in the provision of goods, services and facilities. A simple

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