Dynamic Pricing: Why Prices Keep Changing

B2/C1 business video lesson on algorithms, inflation, retail pricing and customer trust.

Lesson Overview

Students watch a Wall Street Journal video about dynamic pricing. The lesson explores how companies change prices automatically based on demand, cost, competition, location and customer behaviour.

Before you watch

Have you ever noticed a price changing during the day?
Is dynamic pricing fair for customers?
Which businesses should or should not use it?

Video

Open video on YouTube

Prep Part 1

Drag the correct sentence ending into each gap.

1. If prices swing,...

2. If demand rises,...

3. If a business uses dynamic pricing,...

4. If a price is optimal,...

Sentence endings

it changes prices automatically based on market conditions.they move up and down, sometimes quickly.more people want to buy or use something.it is the best price for that moment.

Watch Part 1

Watch from 0:00 to about 2:30. Focus on what dynamic pricing is, where it appears and examples from Amazon and physical stores.

Open video

Comprehension 1

Click each question to reveal the answer.

What example does the video use at the beginning?

It compares the price of a car ride from Times Square to Central Park at 3 p.m. and three hours later.

What is dynamic pricing?

It is a strategy businesses use to change prices automatically and offer the optimal price at a given moment.

What factors can influence dynamic pricing?

Cost, competitor prices, demand, time and location can all influence it.

Where do people already recognise dynamic pricing?

They recognise it in ride sharing, plane tickets, gas prices and Amazon.

What example does the video give from Amazon?

The price of Tide pods changed several times during one day, dropping from $21.49 to $19.99.

Vocabulary from Part 1

Dynamic pricing responds to demand, time and .

Businesses try to offer the optimal .

Prices may vary based on market .

Amazon changes prices to meet or beat .

Options

conditionscompetitorsinflationpricelocation

First-Minute Tapescript Gap Fill

Listen to the first minute of the video and complete the tapescript with the 8 missing words.

On a Monday at 3:00 PM, outside of rush hour , a car from Times Square to Central Park in New York might cost you around dollars. Now, fast forward three hours. As more people are looking for cars, that same ride might cost closer to . If you've taken a trip like this, or bought a plane ticket, you know to expect big price based on demand, time or location. But did you know that those price swings are happening all over the , and often in places where you might not expect, like on your laundry detergent or even a blouse? These changes are part of a high-tech and fast-spreading strategy called dynamic . And as prices around us are rising faster than they have in four , to understand why things cost what they do, you have to understand how it .

Missing words

pricing 17 decades economy traffic works 24 swings

Prep Part 2

Drag the correct sentence ending into each gap.

1. If margins are squeezed,...

2. If prices are granular,...

3. If digital price tags are rolled out,...

4. If a customer finds price changes a turnoff,...

Sentence endings

they are introduced and used in stores.they are adjusted in a very detailed and specific way.profits become smaller because costs rise or prices are too low.they find them annoying or unattractive.

Watch Part 2

Watch from about 2:30 to the end. Focus on digital price tags, algorithms, margins, grocery stores and inflation.

Open video

Comprehension 2

Click each question to reveal the answer.

What have some stores introduced to change prices more easily?

Stores such as Kohl’s and Best Buy have introduced electronic price tags.

Why can frequent price changes annoy grocery customers?

Customers know the usual prices of common items and may resist changes in everyday products.

Why do companies turn to dynamic pricing?

They use it when traditional pricing no longer works and costs shift so much that margins get squeezed.

What does pricing software track?

It tracks factors such as cost, competitor prices, alternatives customers have and what customers may be willing to pay.

Why might customers notice dynamic pricing more during inflation?

Because the inputs behind prices are changing more frequently, so prices may change more often.

Vocabulary from Part 2

Electronic price tags make price changes .

Customers can be resistant to frequent price .

Companies use software to track different .

Algorithms can set prices more .

Options

factorsfrequentlymanufacturerchangesquicker

Final-Minute Tapescript Gap Fill

Listen to the final minute of the video and complete the tapescript with the 8 missing words.

There are a few exceptions where prices are largely and are actually being set by the manufacturer. Examples include jeans, certain types of sneakers or athletic apparel, and prestige . But beyond that, where the retailer is able to set the price, dynamic pricing can be across the store. As more companies use dynamic pricing, you might start noticing it more often, especially during periods of . You could be visiting a store that has been using dynamic pricing for a long , but now you are noticing that prices are changing a lot. That is not necessarily because the company is doing something . It is because the pricing inputs are changing more . The adoption of dynamic pricing is expected to .

Missing words

frequently cosmetics continue inflation fixed different applicable time

Vocabulary Review

Word / phrase	Meaning	Example
rush hour	the busiest travel time of the day	Prices can rise during rush hour.
price swing	a noticeable movement up or down in price	Ride-share apps often have big price swings.
demand	how many people want a product or service	Prices may rise when demand increases.
dynamic pricing	automatically changing prices based on market conditions	Dynamic pricing is spreading across the economy.
optimal price	the best price for a certain moment	Software helps companies find the optimal price.
market conditions	the economic factors affecting price	Costs and competitors are part of market conditions.
fluctuate	change up and down	Amazon prices fluctuate during the day.
brick-and-mortar store	a physical shop, not only online	Dynamic pricing may appear in brick-and-mortar stores.
electronic price tag	a digital label showing a product price	Electronic price tags make updates easier.
turnoff	something that makes people dislike something	Frequent price changes can be a turnoff.
margin	the difference between sales price and costs	Margins can get squeezed by rising costs.
algorithm	a set of computer rules used to solve a problem	Algorithms help set prices automatically.
granular	very detailed and specific	Software can set prices more granularly.
manufacturer-set pricing	prices decided by the manufacturer	Some apparel and cosmetics have manufacturer-set pricing.
adoption	the process of starting to use something	The adoption of dynamic pricing is expected to continue.

Collocations and Expressions

price

market

dynamic pricing

electronic price

gross profit

manufacturer-set

Options

swingsalgorithmtagspricingconditionsmargin

Phrasal Verb Exercise

Fast forward and the ride is more expensive.

Retailers have rolled electronic price tags.

Customers may turn frequent price changes.

Costs can shift the month.

Margins can get squeezed companies would like.

Businesses are starting to experiment dynamic pricing.

Options

outwiththroughoutthree hoursoffagainstmore than

Phrasal Verb Exercise 2: Form Questions

What happens if you fast forward during a busy period?

Should supermarkets roll digital price tags?

Why might customers turn dynamic pricing?

Which costs can shift the month for retailers?

When do margins get squeezed companies would like?

Would local shops benefit from experimenting dynamic pricing?

Options

three hoursagainstthroughoutwithoutmore than

Speaking extension: Choose three questions from Phrasal Verb Exercise 2 and discuss them with a partner.

B2/C1 Grammar: Cause, Effect and Pricing Conditions

This grammar section practises business language for explaining why prices change.

Function	Pattern	Example
Cause and effect	As / Because + clause	As demand rises, prices may increase.
Condition	If + present, can / may + verb	If costs rise, retailers may update prices.
Purpose	so that / in order to	Companies change prices so that margins are protected.
Contrast	Even if / Although + clause	Even if prices are accurate, customers may dislike frequent changes.

Grammar Exercise 1: Drag the correct phrase

As demand , prices may increase.

If costs change quickly, retailers prices more often.

Companies use algorithms so that prices market conditions.

Even if dynamic pricing is efficient, customers it.

Electronic tags make it easier prices quickly.

Options

risesreflectmay dislikechangingcan updateto change

Grammar Exercise 2: Error Correction

Click each sentence to reveal the correction.

As demand will rise, prices may increase.

As demand rises, prices may increase.

If costs changes quickly, retailers can update prices.

If costs change quickly, retailers can update prices.

Companies use algorithms so that to protect margins.

Companies use algorithms to protect margins. / Companies use algorithms so that margins are protected.

Even dynamic pricing is efficient, customers may dislike it.

Even if dynamic pricing is efficient, customers may dislike it.

Grammar Exercise 3: Sentence Transformations

Use “As”.
Demand increases. The price goes up.

Use “If”.
Costs rise. Companies may change prices.

Use “so that”.
Retailers update prices. They want to protect margins.

Use “Even if”.
Dynamic pricing is profitable. Customers may be annoyed.

Useful Patterns

Purpose	Useful language
Explaining price changes	Prices fluctuate because... / As demand changes...
Defending dynamic pricing	It allows businesses to respond to...
Criticising dynamic pricing	Customers may feel frustrated when...
Talking about inflation	When inputs change more frequently, prices may...

Discussion

Is dynamic pricing fair, or does it take advantage of customers?
Which products should never use dynamic pricing?
Would you trust a supermarket that changed prices several times a day?
Should companies be required to show when prices have changed?
How is dynamic pricing different online and in physical stores?
Could dynamic pricing help small businesses survive inflation?

Useful Language for Discussion

Giving an opinion	Talking about customers	Talking about business
I’d argue that... From my perspective... What concerns me is...	Customers may feel... It can be a turnoff when... People expect stable prices for...	Companies need to protect... Margins can get squeezed when... Algorithms allow retailers to...

Role Play: Should We Use Dynamic Pricing?

Situation: A supermarket chain is deciding whether to introduce digital price tags and dynamic pricing in its stores.

Student A: Pricing Director

Argue that dynamic pricing is necessary because costs, demand and competitors change quickly.

Student B: Customer Advocate

Argue that frequent price changes may damage trust and frustrate customers.

Challenge

Use at least three phrases from the grammar section.

Pricing Director language	Customer Advocate language
As costs rise... If competitors change prices... We need algorithms so that...	Even if it is efficient... Customers may dislike... Stable prices matter because...