Variable Pricing Isn't Dynamic Pricing (And Yes, There's a Big Difference)

For the past few years I've heard booking systems proudly announce they offer dynamic pricing.

Then I ask them to show me how it works.

Nine times out of ten, what they demonstrate isn't dynamic pricing at all. It's variable pricing or rules-based pricing and they're not the same thing. It might sound like semantics, but understanding the difference matters, especially as attractions, tours and experiences start looking for ways to maximise revenue in an increasingly competitive market.

Let's start with variable pricing

Variable pricing is simply charging different prices based on predefined rules and the business decides those rules in advance.

Examples include:

• Adult, child and concession pricing
• Peak vs off-peak pricing
• Weekend surcharges
• School holiday pricing
• Public holiday rates
• Early bird discounts
• Last-minute discounts
• Seasonal pricing
• Different prices for different departure times

Nothing is changing automatically based on demand and the system is simply following instructions you've already given it.

Think of it as:

"If this happens, charge this price."

It's incredibly useful and every modern booking system should support it. But it isn't dynamic pricing.

So what is dynamic pricing?

Dynamic pricing uses live data to adjust prices automatically as conditions change. Rather than relying on a fixed pricing calendar, the system continually evaluates demand and recommends or applies new prices. 

It might consider things like:

• Remaining capacity
• Booking pace
• Time until departure
• Historical demand
• Day of week
• Seasonality
• Weather
• Events happening nearby
• Occupancy rates of hotels in your region
• Competitor pricing
• Customer behaviour

The key difference is that the pricing isn't predetermined. It's responding to what's happening right now.

Instead of:

"Saturday is always $120."

Dynamic pricing might say:

"This Saturday is selling much faster than expected and the occupancy of the region is at 90%. Increase the price to $135."

Or:

"The weather looks rainy on Saturday, as an outdoor attraction, reduce the price to $89 to stimulate bookings."

That's dynamic pricing.

Rules-based pricing sits somewhere in the middle

Many booking systems actually offer what we'd call rules-based pricing.

For example:

"If fewer than 10 seats remain, increase the price by 10%."

or

"If booking is within 48 hours, reduce the price by 15%."

These prices do change automatically.But they're still based on rules you've created. The system isn't analysing demand or learning from historical performance, it's simply executing logic.

While this is far more sophisticated than fixed pricing, it still isn't true dynamic pricing.

Why does this matter?

Because operators are making purchasing decisions based on features that don't actually exist. We've seen RFPs ask for dynamic pricing and vendors confidently tick "Yes." and when it goes to the demo stage, it is variable pricing.

We've also seen booking systems proudly announce they have dynamic pricing, but when you look under the hood, it's really rules based pricing.

We don't want you to choose a ticketing or booking system thinking it has dynamic pricing, when in reality it doesn't.

The questions you should ask your booking system

If a vendor says they offer dynamic pricing, don't stop there.

Ask them:

• What data is used to change prices?
• Does the system forecast demand?
• Does it analyse historical booking trends?
• Does is pull in external data such as weather, or hotel occupancy rates? (this is a big hint, if it is a no - it is 99% going to be rules-based pricing)
• Can prices change automatically without predefined rules?
• Is machine learning involved?
• Can the system optimise revenue automatically?
• Or is it simply applying rules that I configure?

The answers will quickly tell you whether you're looking at variable pricing, rules-based pricing or genuine dynamic pricing.

Let's use the right terminology

Variable pricing is valuable. Think seasonal, weekend rates, promo codes, volume based pricing, BOGOF pricing and the like.

Rules-based pricing is even better. Think, "if X happens, then Y applies".

True dynamic pricing is something entirely different. Think "if my tour is 80% full, the weather forecast is sunny and hotel occupancy in my area is at 90% full, then increase the price by $X).

None of these approaches is inherently "better", it depends on the size of your business, your visitor volumes, and your revenue management strategy. But as our industry matures, we need to be more precise with our language.

Because if booking systems, operators and procurement teams are all using different definitions, we're not comparing like for like. And that's where confusion begins.