Dynamic Prices: Meaning, Types Examples, pros & Cons

Dynamic prices generally mean continual changes in the pricing of products and services. It means increasing and decreasing the prices of your products or services based on time and other various factors. This pricing method is complex to understand and implement. Thus, in this guide, we have mentioned everything you need about dynamic prices. 

What are Dynamic Prices?

Dynamic Prices refer to a strategy that you can use to assess the market’s current requirements and decide on an adaptable price for your product or services. It can also be called surge pricing or time-based pricing. It depends upon the timing and situation of the market and your product or service. 

Dynamic Prices
Dynamic Prices

Dynamic Pricing is generally used in various industries such as public transportation, electricity houses, shopping, entertainment, leisure, and hospitality. Under a dynamic prices strategy, you must price your product or service based upon a specific moment, supply and demand situation in the market, competitor’s pricing, and much more. 

The 8 Types of Dynamic Prices 

Since 2015, the concept of Dynamic Prices has become very popular. However, market specialists believe that it will be exponentially grown in 2023. Let me tell you the technical reason behind it. 

You would have seen the extensive use of traditional marketing in the past years. But, nowadays, companies are more focused on the online world. You can reach diverse people online, but it also brings diversity to your business. Simply put, you won’t have all the customers of the same mindset and situation. 

Therefore, Dynamic Prices come into play. It allows you to maximize benefits depending on the time and situation. Let’s begin with the types of dynamic pricing you need. 

Types of Dynamic Prices
Types of Dynamic Prices

1. Dynamic Prices Based Upon Groups

Under this dynamic pricing segment, you have to offer a particular discount. The specific group of people such as public servants and senior citizens. It generally helps companies in promoting their products and targeting price-sensitive customers. 

2. Dynamic Prices Based Upon Time

This pricing strategy allows you to take additional benefits depending on the timely scenarios. Usually, the demand for a particular product or service fluctuates with time. Your business can offer additional customer benefits to gain unusual sales at such times. We have mentioned some of the examples below: 

  • You could have seen the low fares of taxis at night to encourage people to take rides at night. 
  • You will have seen the extra discount over the previous collection of clothes after the new arrival. 
  • You would have seen the changing prices of aeroplane tickets based on the seat, the time you’re booking, and the day left for the flight. 

3. Cost Plus Pricing

In this pricing strategy, you have to produce your original product and then sell it at a higher price in the market. It is one of the typical dynamic pricing examples. 

4. Competitor-Based Pricing 

Competitor-based pricing refers to a pricing technique where companies research competitors’ pricing and then decide on their product or service pricing. 

5. Value-Based Pricing 

Value-based pricing refers to the price of the product or services based on the customers’ purchase power and willingness. In this pricing strategy, you have to take an estimate depending on what your customers want. 

6. Price Skimming 

In Price Skimming, companies generally put their products or services at the higher possible entry price and gradually decrease the sale value with time. The main motive behind this strategy is to approach price-sensitive customers after dealing with the required clients. 

7. Bundle Pricing

Bundle Pricing refers to bundling different products together and then selling them at a single price instead of selling all of them at different prices. It generally helps businesses to approach more customers and generate more revenue, as you make the product overall highly valuable. 

8. Penetration Pricing

Penetration pricing is one of the most successful pricing strategies when entering a new but established market. Generally, companies have to offer products at lower prices to attract customers. However, you must also increase your pricing with time to maintain your company. 

Top Dynamic Pricing Examples

There are various examples of dynamic pricing. You will be amazed by such an example as you would have already seen all these excellent examples daily. Let me remind you of such examples. 

Example #1: Hotels

Hotels fluctuate their prices based on availability and seasonality. In simple terms, you would have seen the hotel prices at their peak during the season of their places. For example, New York hotels get expensive during Christmas and New Year. 

Example #2: Utility Providers 

Utility provider companies like electricity and gas generally utilize dynamic prices. For instance, you would have observed the lower need for indoor heating during the summer, which reduces electricity bills. 

Example #3: Google Ads 

Google Ads even works upon the dynamic prices as it charges depending upon the popularity of the keyword. Thus, you must spend your money based on the keyword’s popularity and density. 

Example #4: Airlines 

Airlines utilize dynamic prices, as they charge differently based on the class, seat, and time you book. 

Pros and Cons of Dynamic Prices 


  • It allows your business to earn more depending on the time. Thus, you can provide various rewards to your audience during busy schedules. 
  • It also allows your business to sell products and services during downtime. It is possible only because of the specific, timely discounts. 


  • If you don’t have any consistent prices for your product or services, then various customers might feel that you are cheating on them. Generally, people like to see fair prices once they’ve purchased. However, now people also understand marketing tactics. 
  • It would help if you did not change your prices, as it would make you lose some customers. It would also impact you a lot over your revenue. It generally happens because your customer would be habitual of seeing the dynamic prices and always wait for your low time to purchase the products. 

Wrap Up 

Dynamic Prices are generally helpful for companies to let customers have various options based on timing and situation. It will make your company versatile with the pricing. Thus, we hope you like the guide and find all the relevant information regarding dynamic pricing. 

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