Dynamic Pricing: Legal Considerations For UK Businesses

Dynamic pricing tools are increasingly shaping how businesses set prices. Across online marketplaces, subscription services, energy providers and travel companies, automated systems adjust prices based on demand, supply and market conditions. While this can improve margins and speed up commercial decision-making, it is also attracting closer scrutiny from consumer protection regulators.

In the UK, the Competition and Markets Authority (CMA) has issued new Price Transparency and Unfair Commercial Practices Guidance under the Digital Markets, Competition and Consumers Act 2024 (DMCCA). Dynamic pricing falls squarely within its scope. This article reviews what that means in practice for UK businesses.

What is dynamic pricing?

Dynamic pricing involves adjusting prices in real time using automated systems that analyse factors such as demand, inventory levels, market trends and customer behaviour. Airlines and hotels have long used this approach, and it is now common across retail and service sectors. Consumer law does not prohibit dynamic pricing. However, it regulates how pricing is implemented and communicated. For example, a ride-hailing app may increase prices during peak hours when demand is high and fewer drivers are available. This is generally lawful. However, the business must clearly inform customers that prices may fluctuate and must present the final price before the booking is confirmed.

CMA guidance under the DMCCA

In November 2025, the CMA issued updated guidance reinforcing price transparency obligations under the DMCCA. The message is clear: businesses using dynamic or algorithmic pricing must meet enhanced standards of consumer clarity and fairness.

While businesses may continue adjusting prices using automated systems, consumers must be presented with the full price payable at the earliest relevant stage. This total must include all unavoidable charges, fees and taxes. The obligation applies wherever pricing is communicated in a way that could influence a purchasing decision, including any "invitation to purchase".

Practically, this means businesses should avoid displaying headline prices that exclude mandatory charges and revealing the full cost only at checkout. So-called "drip pricing" and "partitioned pricing" will generally be considered prohibited under the DMCCA, subject to limited exceptions. Headline prices must also be genuine and realistically attainable. If only a small proportion of consumers can access the advertised price, the practice may be regarded as misleading.

Lesson 1: total price transparency

Where a price constitutes an "invitation to purchase", businesses must clearly display the total amount payable, including mandatory fees and taxes. This applies throughout the customer journey, from marketing and listings to checkout. Algorithmic and personalised pricing adjustments must comply with these standards at every stage.

This also means that mandatory charges such as booking, service or delivery fees must be incorporated into the total price from the outset, including in early-stage marketing or advertising. Failure to do so risks breaching the DMCCA's strengthened provisions on unfair commercial practices.

Lesson 2: governance and documentation

Businesses should maintain documented governance frameworks, keep clear records showing how pricing outputs align with consumer protection rules, implement escalation procedures for identified risks and retain audit trails demonstrating ongoing monitoring. Regulators are increasingly interested in understanding how algorithmic pricing decisions are made and whether their outcomes could mislead or disadvantage consumers.

Lesson 3: managing legal and reputational risk

If two consumers are shown materially different prices for the same product without a clear explanation, or if prices increase during the purchasing process without adequate disclosure, businesses may face regulatory scrutiny and customer complaints. Similarly, presenting an attractive headline price that most consumers cannot realistically obtain may be considered misleading.

The CMA's guidance emphasises that headline prices must be realistic and attainable. Businesses should therefore ensure that pricing practices are transparent, explainable and consistently applied. Clear communication about when and why prices may change, together with robust internal oversight of algorithmic pricing decisions, is essential to maintaining consumer trust and reducing regulatory risk.

Practical safeguards for businesses

To manage risk and ensure compliance, businesses should consider implementing a number of practical safeguards:

• Governance: establish clear internal policies governing the use of dynamic and algorithmic pricing, ensuring alignment with legal and ethical standards. Maintain oversight of testing to identify potentially misleading or discriminatory outcomes.
• Auditing: conduct regular reviews of pricing systems to assess compliance, fairness and unintended consequences, and retain comprehensive audit trails.
• Total price checks: map all pricing touchpoints across the customer journey to ensure that any invitation to purchase presents a clear, timely and fully inclusive total price in line with the DMCCA.
• Training: Ensure that commercial, technical and customer-facing teams understand the legal parameters. Review marketing claims such as "sale", "best price" or "limited offer" to confirm they remain compliant.
• Customer communication: Provide clear explanations of pricing practices and offer channels for consumer feedback.
• Regulatory monitoring: Keep abreast of regulatory developments and evolving market practices to maintain compliance while remaining competitive.

Businesses operating in the digital ecosystem should closely monitor developments, as the regulatory interpretation emerging from this case may influence future compliance standards across the sector.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.