Katana VentraIP

Dynamic pricing

Dynamic pricing, also referred to as surge pricing, demand pricing, or time-based pricing, is a revenue management pricing strategy in which businesses set flexible prices for products or services based on current market demands. It usually entails raising prices during periods of peak demand and lowering prices during periods of low demand.[1]

Not to be confused with Variable pricing.

As a pricing strategy, it encourages consumers to make purchases during periods of low demand (such as buying tickets well in advance of an event or buying meals outside of lunch and dinner rushes)[1] and disincentivizes them during periods of high demand (such as using less electricity during peak electricity hours).[2][3] In some sectors, economists have characterized dynamic pricing as having welfare improvements over uniform pricing and contributing to more optimal allocation of limited resources.[4] Its usage often stirs public controversy, as people frequently think of it as price gouging.[5]


Businesses are able to change prices based on algorithms that take into account competitor pricing, supply and demand, and other external factors in the market. Dynamic pricing is a common practice in several industries such as hospitality, tourism, entertainment, retail, electricity, and public transport. Each industry takes a slightly different approach to dynamic pricing based on its individual needs and the demand for the product.

Time-of-use pricing (TOU pricing), whereby electricity prices are set for a specific time period on an advance or forward basis, typically not changing more often than twice a year. Prices paid for energy consumed during these periods are pre-established and known to consumers in advance, allowing them to vary their usage in response to such prices and manage their energy costs by shifting usage to a lower-cost period, or reducing their consumption overall ()

demand response

Critical peak pricing, whereby time-of-use prices are in effect except for certain peak days, when prices may reflect the costs of generating and/or purchasing electricity at the wholesale level.

Real-time pricing, whereby electricity prices may change as often as hourly (exceptionally more often). Prices may be signaled to a user on an advanced or forward basis, reflecting the 's cost of generating and/or purchasing electricity at the wholesale level; and

utility

Peak-load reduction credits, for consumers with large loads who enter into pre-established peak-load-reduction agreements that reduce a utility's planned capacity obligations.

Hedonic regression

Pay what you want

Price discrimination

Price gouging

Variable pricing

Demand shaping