The New Dynamics of Pricing

What’s the most consumers will pay? It’s the billion-dollar question.

The value of something, at its root, is whatever someone is willing to pay for it. There might be no better distillation of this than auctions, where the process plays out in real time as potential buyers compete to be the highest bidder. The most outrageous example might be Comedian, the conceptual art project by Maurizio Cattelan consisting of a banana duct-taped to a wall. There were actually three bananas, and crypto entrepreneur Justin Sun bought one for $6.2 million in 2024 then ate the banana onstage, declaring “the real value is the concept itself.”

For companies experimenting with dynamic, personalized pricing, the value is much more tangible. It’s about maximizing profit by selling a product or service for the most a specific individual is willing to pay.

For decades, businesses have used generalized data to set and change pricing. Think airlines charging more for flights to the Caribbean in winter than they do in summer. They know people are tired of the cold and want to escape to someplace warm, so the airlines charge accordingly. That’s generalized algorithmic pricing.

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What dynamic, personalized pricing does is account for the person searching for a product, adding to their cart, and getting ready to click purchase. Where does that person live? What else do they like? What other products have they bought or shown interest in? Depending on how much time that shopper spends online, even not making purchases, there might be a wealth of information about preferences and spending habits available for sellers to use in personalized pricing. The aim is to find the pain point, the most that person will pay, and get them to pay it.

There’s a catch, of course, in that consumers don’t particularly like having businesses using their personal information that way, especially if it leads them to pay more for the same product someone else is buying for less. That can lead to backlash that prompts sellers to drop dynamic pricing for fear of losing customers. But for those companies that can walk the tightrope, personalized pricing can really pay off.

$23.2 billion

Live Nation, the world’s largest live entertainment company, posted record revenues of $23.2 billion in 2024. It’s 2023 revenue of $22.75 billion represented a 36% jump from the year prior. While some of that was no doubt due to an ongoing post-pandemic recovery for live events, dynamic pricing was a major contributor to the increase. For Ticketmaster sales, Live Nation adjusts prices for concerts and sporting events based on the number of tickets left, the overall demand, and other factors. CEO Michael Rapino thinks there’s still room to grow.

“We have a lot of runway left. So when you read about ticket prices going up, the average concert price is still $72. Try going to a Laker game for that, and there’s 80 of them. The concert is underpriced and has been for a long time,” he said at CNBC and Boardroom’s Game Plan conference.

$6,730

Though FIFA’s trial run of using dynamic pricing for last summer’s Club World Cup tournament in the U.S. led to some tickets going for as low as $13.40, the world soccer governing body is using the strategy again for the 2026 World Cup in the U.S., Canada, and Mexico. While some group stage game tickets will start as low as $60, premium tickets for the final – for regular seats, not hospitality suites – will start at $6,730. High demand for the world’s most popular sporting event seems likely to push prices higher.

Cato Institute economists Ryan Bourne and Nathan Miller determined that “some fans could purchase tickets at vastly different prices to other fans for similar seats,” but FIFA’s “pricing proposal at least acknowledges the real-world trade-offs that this complex event must navigate.”

FIFA reasons that North American fanbases are already accustomed to dynamic pricing, and its revenue target is $13 billion for this World Cup cycle, nearly double the $7.6 billion it brought in during the 2019-22 cycle.

“This is the first time in history FIFA has used dynamic pricing for a World Cup,” FIFA’s 2026 World Cup COO Heimo Schirgi told ESPN. “Get your tickets early … because anything could happen.

““We’re looking at optimizing revenue but also optimizing attendance. It’s always a balance between different factors.”

11.1%

A Harvard Business Review analysis found that “a 1% improvement in price, assuming no loss of volume, increases operating profit by 11.1%.” That makes experimentation with dynamic pricing models from purveyors like Beyond and Prisync a potential goldmine.

“Even if a company’s managers make the right pricing decisions 90% of the time, it’s worthwhile to try for 92% — the payoff is that high,” HBR concluded.

While most companies won’t dive into the deep end of dynamic pricing like Amazon, which uses advanced algorithms to make an average of 12.6 price changes daily, the digital marketplace is sure to see more businesses turn to dynamic pricing in some form.

“Indeed, in today’s markets it is hard to imagine a company surviving through inflation, recessions, a global pandemic, and other major shocks without the ability to tailor its prices to market conditions. By varying prices, businesses can serve more people at a better margin, all the while enhancing customer experiences and operations by smoothing out demand,” HBR concluded. “We believe that dynamic pricing ultimately succeeds when it serves the long-term interest of companies and customers alike.”

For businesses, the potential reward is too good to pass up.