Dynamic pricing is a pricing strategy in which businesses set flexible prices for products or services based on current market demand. It usually entails raising prices during periods of peak demand and lowering prices during periods of low demand and has become a common practice in industries like airlines, hotels, and ride-sharing services.
However, recent events in the UK involving Oasis’ reunion tour has highlighted the potential pitfalls of this pricing model when applied without transparency or clear communication. This shows us that while dynamic pricing is legal and often effective in driving revenue, it can alienate customers and damage brands when fairness is perceived to be compromised.
In a contrasting case, Marylebone Cricket Club’s (MCC) handling of tickets which resulted in a largely empty ground on the fourth day of England Test match against Sri Lanka, was due to their pricing being insufficiently dynamic.
Many companies feel more comfortable promoting the attributes and benefits of their products than they do discussing price. This stems from a belief that talking about price can lead to negative perceptions. After all, companies prefer to highlight what draws customers in—the quality of their offering or the uniqueness of their brand. Price, on the other hand, is often seen as a factor that could provoke a negative reaction.
But by avoiding open conversations about pricing, companies may be setting themselves up for failure. Customers will inevitably form their own opinions about how fair a company’s pricing approach is based on what they observe. And here’s the critical part: customers rarely give companies the benefit of the doubt. They have a strong sense of what constitutes “fair” pricing, and while they may not articulate their principles explicitly, they certainly recognise when those unwritten rules are broken.
Recent headlines in the UK illustrate the complexity of dynamic pricing when fairness comes into question. Ticketmaster’s aggressive use of dynamic pricing for tickets to Oasis’ highly anticipated reunion tour caused public outrage, and damaged the band’s working class heroes image by pushing prices out of reach for many. Fans queued for hours only to discover that ticket prices had doubled by the time they reached the checkout. Many found themselves unable to afford tickets for an event they had eagerly anticipated for years. This was a prime example of dynamic pricing gone wrong: fans were not prepared for such fluctuations, and the lack of upfront and in-queue communication left them feeling deceived. The core issue was not necessarily the dynamic pricing itself, but rather the lack of transparency and communication surrounding the pricing changes.
In contrast, the MCC faced a dilemma in pricing tickets for the fourth day of England’s Test match against Sri Lanka. With a starting price of £95, roughly 2/3 of the cricket ground was empty. Part of the issue here is England’s positive playing style, which results in many of their matches finishing earlier than the final fifth day, and in this case the result being pretty much defined by the end of the third day. While the MCC did eventually reduce prices to reflect the low interest in the final day’s play, this created a brand risk given people who had bought the tickets six months earlier paid full price. As a result, the MCC didn’t adequately publicise the discount to drive sufficient demand. As a result, the ground was half occupied, and the discount strategy backfired. However, if six months ago the MCC had clearly communicated that they may vary the price closer the day to reflect the state of the match which affects levels of demand this would have made the decision to discount easier and more acceptable to customers.
The problems highlighted by Oasis and the MCC reveal an important lesson: if a company chooses to implement dynamic pricing, it must be transparent, fair, and consistent in its communication.
Companies need to recognise that customers’ attitudes toward dynamic pricing differ depending on the industry. While people may accept fluctuating prices for airline tickets, they are less tolerant of dynamic pricing in other sectors, such as food, energy, or entertainment. It’s crucial to determine whether dynamic pricing aligns with your brand values and customer expectations before implementing it.
If you decide to use dynamic pricing, be explicit about it. Customers will figure it out eventually, but by then, the damage to your reputation may already be done. Transparency can go a long way in building trust and managing expectations. For instance, if Oasis had clearly communicated their pricing approach ahead of time and explained how prices would fluctuate based on demand, many fans would have been more prepared for the price changes. Similarly, if the MCC had informed fans that prices for the fourth day of the Test match could be discounted closer to the event, there might have been fewer complaints about fairness.
In some situations, a mix of dynamic and fixed pricing might be the best solution. For example, the MCC could guarantee a fixed price for tickets purchased in advance while offering a separate batch of tickets closer to the date that would be subject to dynamic pricing. This approach would give fans the option to secure a ticket at a known price while also allowing for price adjustments based on demand later on.
One major issue with the Oasis ticket sale was the fluctuating prices while fans were queuing. A possible solution would be to allow customers to lock in a price once they begin the purchasing process. This would prevent the frustration of seeing prices soar after waiting for hours and provide a fairer experience for fans.
Dynamic pricing is becoming more prevalent in some sectors. But pricing practices will need to evolve to keep up with customer expectations, and their perceptions of fairness – which in turn are influenced by what your brand stands for, the availability of competitive offers, and whether the purchase is essential or not. In all instances, it’s essential that companies are open, honest, and proactive in their communication about how their pricing works.
Dynamic pricing doesn’t have to be an adversarial tool. It can enhance the customer experience when used properly and lowers prices to fill supply when demand is low. The key is to balance revenue optimisation with customer satisfaction, ensuring that no one feels taken advantage of. As businesses refine their pricing models, they should remember that transparency, fairness, and flexibility are the foundation of any successful pricing strategy.
