How AI and Dynamic Pricing Shape Our Everyday Costs

Artificial Intelligence

A few days ago, I was having lunch with a colleague, and we started discussing AI (artificial intelligence), especially the recent popularity of large language models like ChatGPT over the past two or three years. He shared a story: once, while at the train station trying to get to the airport, the train service was suddenly disrupted. So, he checked the Uber fare to the airport on his phone, and it was about £80. Coincidentally, a woman nearby was also heading to the airport, so he asked if they could share the ride to split the fare. Interestingly, when she checked her Uber app, it showed a price of £50.

My colleague didn’t understand why the fare could vary so much within just a few minutes. I suggested it could be because Uber might know he works at Microsoft (and assumes he can afford it).

In fact, many companies already have algorithms (even without using AI) to implement dynamic pricing. For instance, if they see that you’re a loyal customer, they may believe you’re more likely to purchase, so they’ll raise the price. Companies might also show different prices based on a user’s location, which is why sometimes you can use a VPN to switch regions and get a cheaper rate.

With the addition of AI, combined with AI’s growing understanding of you (your gender, age, interests, etc.), these models can guess the highest price you’d be willing to pay, helping companies maximize profits. Of course, the simplest way to avoid these “pricing traps” is to compare prices across platforms.

Uber shows different fares on different devices

A colleague recently booked an Uber ride on two differentphones simultaneously, from the same pick-up point to thsame drop-off point. She wanted to improve his chances of getting a ride duringpeak hours. On Android, the fare was < 290.79 – On iPhone, the fare was 342.47.What’s going on here?

This isn’t a glitch-it’s design thinking in action, driven by dataand user insights:

• User Behaviour: iPhone users are often perceived as “premium customers” Data shows they’re more willing to payhigher prices.
• Platform Fees: Apple charges up to 30% commission onin-app purchases, subtly influencing pricing decisions.
• Dynamic Personalisation: Apps increasingly use dynamicpricing based on user behaviour and profiles. Your choice ofdevice could impact what you’re charged.

Here’s the real question:

• When does personalisation improve user experience, andwhen does it start to feel exploitative?
• From a design thinking perspective, this approach is rooted inunderstanding user behaviour and adapting to it.
• For businesses, it’s smart-leveraging data to optimise value.
• For users, it’s complicated-does this pricing strategy enhancthe experience, or does it break trust?
• What do you think? Should businesses be more transparent about these pricincstrategies?

Uber Taxi Different Price/Fares on Different Devices

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