Dynamic pricing is not a new concept, but recent advances in artificial intelligence have pushed it into new territory. Once associated mainly with airlines and hotels, dynamic pricing is now being adopted by a wide range of industries, including software and digital services. Brands such as Lufthansa and Adobe have been experimenting with AI led pricing models that respond to market conditions in real time. Their early results show why this approach is gaining momentum.
Why dynamic pricing is growing
Traditional pricing models often rely on fixed rates and seasonal adjustments. While these provide stability, they can leave revenue on the table when demand spikes or lead to missed opportunities when buyers are price sensitive. AI driven dynamic pricing systems analyse vast data sets such as demand signals, inventory levels, competitor activity and customer behaviour. They then adjust prices in real time to optimise revenue and maintain competitiveness.
This approach allows businesses to react quickly rather than waiting for quarterly reviews or manual updates. It is particularly attractive in sectors where costs and demand fluctuate daily.
Lufthansa’s recent trials
Airlines have used dynamic pricing for years, but Lufthansa has been testing a more sophisticated AI based model across selected routes. Instead of relying solely on historical data and booking curves, the system monitors live search volumes, competitor pricing and even macroeconomic factors. When the algorithm detects rising demand for a route, it can adjust fares incrementally, maximising yield while still remaining competitive.
Lufthansa has reported that these AI enhanced adjustments have led to improved seat utilisation and higher average ticket values. The company is also exploring how dynamic pricing could be used to incentivise off peak travel by lowering fares in quieter periods, smoothing demand and improving overall operational efficiency.
Adobe’s approach in the SaaS market
Dynamic pricing is less common in the software sector, but Adobe has begun experimenting with AI powered models for certain enterprise services. Instead of offering a single flat rate, Adobe’s system evaluates account size, product usage patterns and renewal likelihood. Prices can then be adjusted to reflect the value delivered to each customer.
For example, a large enterprise using multiple Adobe tools with high engagement might see a tailored renewal offer that reflects their expansion. Meanwhile, smaller customers may be presented with flexible entry level packages that lower barriers to adoption. This granular approach allows Adobe to match pricing with perceived value, improving retention and upsell opportunities.
What marketers can learn
These experiments show that dynamic pricing is not just a revenue tool. It can also be a powerful lever for customer segmentation and positioning. By tailoring prices based on behaviour and demand, brands can signal exclusivity, reward loyalty or encourage trial without broad blanket discounts.
Marketers should also consider the messaging around dynamic pricing. Transparency is key. Customers are more likely to accept variable prices if they understand the factors behind them, such as real time demand or personalised value.
Points to watch
- Data quality is crucial
AI models rely on accurate, up to date information. Poor data can lead to price swings that confuse or alienate customers. - Customer perception matters
Frequent price changes without clear logic can undermine trust. Marketers need to balance optimisation with a consistent brand experience. - Testing should be controlled
Lufthansa and Adobe both started with specific routes or products to measure impact before scaling. - Ethical considerations are growing
Regulators and consumers are paying closer attention to how pricing algorithms work. Brands must ensure compliance and fairness.
A sign of things to come
Dynamic pricing is moving beyond its traditional strongholds. Airlines like Lufthansa are proving that AI can fine tune long established models, while SaaS companies like Adobe are showing that even software subscriptions can benefit from flexibility. For marketers, these developments highlight a future where pricing is no longer static but part of a dynamic dialogue with customers. Brands that embrace this shift carefully and transparently will be well positioned to drive revenue and build stronger relationships in the process.
