What do pricey airline tickets during the holidays, clearance rack sweaters in the summertime, and expensive next-generation tech have in common? Their prices are all dictated by a strategy known as demand-based pricing — a methodology that tries to capitalize on the ebb and flow of what customers are willing to pay for a product or service at any given time.

Here, we’ll explore the concept a bit further, review some demand-based pricing methods, see some examples of the methodology in practice, and review its pros and cons. Let’s jump in.

Demand-based pricing comes in a variety of

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