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6 Types of Dynamic Pricing

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Dynamic pricing is the process of changing prices in real time in response to data. This is typically done by automation such as business rules, algorithms or artificial intelligence. Human judgement may also be involved. The following are common types of dynamic pricing.

Revenue Management

Setting prices at a finely grained level based on data related to competition, demand and inventory levels. For example, airlines may set prices at the seat level and use a variety of sales channels and policies to optimize revenue using data such as demand forecasts.

Supply & Demand

Estimating supply and demand in real time to set prices. In some cases, this can be unpopular with customers or be prohibited by law. For example, raising prices during a natural disaster is typically considered price gouging.


Dynamic pricing may be used to manage cities to improve quality of life or the environment. For example, tolls for emitting air pollution that go up when air quality drops.


Adjusting prices in response to competition in real time. Common in highly competitive market places long before automation existed.


Adjusting prices in response to low or high inventory levels. Common in industries where inventory occurs at a point in time such as an airline seat or a hotel room.

Price Sensitivity

Algorithms that detect price sensitivities in real time. This requires careful attention to laws, regulations, business ethics, reputational issues and customer experience. Generally speaking, customers want pricing to be equitable, transparent and predictable.
Overview: Dynamic Pricing
The process of changing prices in real time in response to data.
Related Concepts


This is the complete list of articles we have written about pricing.
Algorithmic Pricing
Bargaining Power
Benchmark Price
Price Fixing
Cost-plus Pricing
Price Gouging
Customary Pricing
Decoy Effect
Everyday Low Price
Marginal Utility
Willingness To Pay
Dynamic Pricing
High-Low Pricing
Market Value
Flat Pricing
Loss Leader
Predatory Pricing
Price Discrimination
Snob Effect
Market Price
Price Competition
Price Leadership
Premium Pricing
Price Economics
Price War
Revenue Management
Veblen Goods
Price Floor
Price Promotion
Price Sensitivity
Price Skimming
Price Umbrella
Pricing Power
Pricing Strategy
Sticky Prices
Value For Money
More ...
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The common types of pricing.

Pricing Examples

An overview of common pricing strategies.

Pricing Strategy

An overview of common pricing strategies.

Sales Promotion

The common types of sales promotion.

Price Optimization

The common ways to optimize pricing.

Flat Pricing

A definition of flat pricing with examples.

Revenue Management

The definition of revenue management with examples.

Pricing Objectives

The common types of price objective.

Benchmark Price

A definition of benchmark price with examples.

Price Escalation

The two common meanings of the term price escalation.

Price Economics

A list of price economics principles and theories.

Willingness To Pay

A list of factors that influence willingness to pay.

Sticky Prices

Prices that stick to an established range and resist changing economic forces such as inflation.


A definition of commoditization with examples.

Too Cheap To Meter

A definition of too cheap to meter with examples.

Relative Price

The definition of relative price with examples.


An overview of dumping with an example.

Value vs Price

The difference between value and price with examples.

Market Value

The definition of market value with examples.

Competitive Market

A complete overview of competitive markets with examples.
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