Why Algorithmic Pricing Is Making Everything Cost More
You put headphones in your Amazon cart for $199. An hour later, they’re $249. Your usual Uber ride home
You put headphones in your Amazon cart for $199. An hour later, they’re $249. Your usual Uber ride home costs triple because it started raining. The cereal at Walmart costs more in the evening than it did that morning.
This isn’t a glitch. It’s algorithmic pricing, and it’s spreading everywhere.
Companies dress it up with terms like “dynamic pricing” and “market optimization,” but the truth is simple. Algorithms now control what you pay for almost everything, and their job is to extract the maximum possible money from each purchase.
What algorithmic pricing actually is
Algorithmic pricing uses artificial intelligence to automatically adjust prices in real-time. Instead of humans setting fixed prices, computer programs make millions of pricing decisions based on your personal data, market demand, and competitor actions.
Amazon makes over 2.5 million price changes every day, with prices shifting every 10 minutes. The system tracks your browsing history, location, device type, and purchase patterns to calculate exactly how much you’re likely to spend.
Think of it as a salesperson who knows your income, shopping habits, and personal weaknesses – then uses that information to squeeze every dollar possible from each transaction.
Where it’s spreading fast
Most people know about Uber’s surge pricing, but algorithmic pricing has quietly invaded nearly every industry.
Airlines were the pioneers, using algorithms that consider booking patterns, seat availability, and competitor prices. The same flight can cost dramatically different amounts depending on when you book, what device you use, and your search history.
Walmart is installing electronic shelf labels in 2,300 stores by 2026. With electronic shelf labels, prices can change up to six times a minute. What cost $4.50 for cereal in the morning might be $5.25 when families shop after work.
Amazon changes prices on everything from books to electronics multiple times daily. The marketplace giant adjusts its product prices a remarkable 2.5 million times each day. The company tracks whether you’re price-sensitive or willing to pay premium rates, then adjusts accordingly.
Hotels and Airbnb use algorithms that factor in local events, seasonal demand, and booking velocity. That $120 hotel room becomes $350 during a conference because algorithms detect limited supply.
Major grocery chains like Kroger are experimenting with digital price tags that adjust based on time of day, weather, and customer demographics. Cold medicine gets more expensive during flu season. Bottled water prices spike before storms.
Streaming services set subscription rates based on your location, viewing habits, and behavioral indicators. The same Netflix subscription costs different amounts in different zip codes.
Event tickets through platforms like Ticketmaster use dynamic pricing that can multiply face value. Thousands of Oasis fans had waited for long periods in virtual queues only to be asked to pay more than double the advertised price for tickets.
Even restaurants are adopting algorithmic pricing. Some chains charge different amounts for identical meals based on time of day, weather, and delivery demand.
How this hurts regular people
Algorithmic pricing creates several major problems for consumers trying to buy things at fair prices.
Comparison shopping becomes impossible. When prices change constantly, you can’t research options and return later because costs may have jumped significantly. This kills the competitive pressure that traditionally kept businesses honest.
Your data gets weaponized against you. Large tech platforms, with vast stores of data can exploit this outbreak driving up prices for those suffering from the flu. Shop from an expensive neighborhood? Algorithms automatically show higher prices. Browse the same product multiple times? Prices increase because the system detects strong interest.
Family budgeting becomes impossible. You can’t plan travel, groceries, or basic purchases when prices fluctuate unpredictably throughout the day based on algorithmic calculations rather than actual supply and demand.
Prices trend upward over time. Research shows that algorithmic pricing can lead to higher prices for consumers in competitive markets and even in the absence of collusion. Despite corporate promises about lower off-peak prices, average costs increase.
Market coordination without collusion. The Justice Department’s lawsuit against RealPage shows how this works in practice. The rent-setting software helped landlords coordinate price increases across millions of apartments while maintaining legal cover.
The real-world damage
This isn’t theoretical. Senator Sherrod Brown’s investigation revealed that major retailers like Amazon and Walmart use personal customer data including browsing history, device information, and location to implement discriminatory pricing.
Senators Elizabeth Warren and Bob Casey wrote that electronic shelf labels may help companies “extract maximum profits from consumers at a time when Americans are dealing with the cost of grocery prices.” The lawmakers called it “outrageous that, as families continue to struggle to pay to put food on the table, grocery giants like Kroger continue to roll out surge pricing.”
The housing market shows algorithmic pricing’s most damaging effects. RealPage’s software helped coordinate rent increases across millions of apartments in major cities, contributing directly to housing affordability crises. The Justice Department has charged six major landlords with using algorithms to manipulate rental markets.
During health emergencies, algorithmic pricing means prescription drugs and medical supplies automatically get more expensive right when people need them most. Flu outbreaks trigger medication price spikes. Natural disasters lead to algorithmic gouging on essential supplies.
The grocery store battlefield
The biggest fight over algorithmic pricing is happening in grocery stores. Kroger began using electronic shelf label technology in 2018 and has since expanded it to 500 stores nationwide.
Electronic shelf labels can change prices of goods throughout the day, making it possible for a shopper to see one price at the shelf when picking up the item and another price when checking out.
Consumer advocates worry about “surveillance pricing” where stores use facial recognition and customer data to show different people different prices for identical products. Grocery stores might categorize shoppers as “interested in fitness and not price sensitive” based on often buying organic foods and visiting gym websites.
Grocery chains defend the technology, claiming it helps reduce waste and lower prices. But research shows grocery stores make thin margins on individual items and rely heavily on customer loyalty. The question is whether algorithmic pricing serves consumers or just maximizes corporate profits.
Fighting back
Some governments are pushing back. San Francisco and Philadelphia banned rent-setting algorithms that use confidential competitor data. In the first seven months of 2025, state legislators introduced 51 bills across 24 states aimed at regulating algorithmic pricing.
The European Union requires major platforms to disclose algorithmic pricing practices. Several states are considering broader consumer protection measures as more people understand how these systems work.
But algorithmic pricing continues spreading faster than oversight can develop. The public needs to better understand how pricing algorithms impact what customers pay for products and whether technology serves consumers or exploits them.
The fundamental question is whether we’ll let algorithms optimize purely for corporate profit, or demand that pricing technology serve consumer interests too. Right now, the algorithms are winning – and everyone else is paying more.
Sources:
- U.S. Department of Justice – RealPage Lawsuit
- NPR – Electronic Shelf Labels at Walmart
- CBS News – Walmart Digital Price Tags
- Senate Banking Committee – Brown Investigation
- Senator Elizabeth Warren – Kroger Investigation
- Profitero Research – Amazon Price Changes
- Harvard Business School – Dynamic Pricing Research
- Grocery Dive – Kroger Electronic Labels
