How Does AI Enabled Pricing Work?

AI-enabled pricing, also known as surveillance or algorithmic pricing, uses AI to set prices based on data collected from consumers. The data can come from browsing behaviour, location, device type and even how much battery power your phone has. Al Jazeera reported that Delta Air Lines said 3% of its domestic fares are already determined by AI and that it plans to raise this to 20% by the end of the year.

This form of pricing lets companies calculate how much each person is likely to pay for a product or service. Companies can use this data to get the highest price each user is willing to pay. So, that means two people might pay different amounts for the same flight, taxi ride – even a bottle of milk.

Uber has of course been called out for similar reasons. In a 2023 investigation by Belgian newspaper La Derniere Heure, prices for the same journey were found to change based on the phone’s battery level. A ride from the paper’s Brussels office cost €17.56 from a phone with 12% battery and €16.60 from one with 84%. Uber denied targeting users that way but admitted that riders with low battery are more likely to accept surge pricing.

How Does It Work Behind The Scenes?

AI-enabled pricing systems work using loads of consumer data. Retailers gather this information from account sign ups, purchase histories, and digital tracking tools such as web pixels. These pixels record browsing time, mouse movements, scrolling habits as well as video engagement. The Federal Trade Commission found that this tracking helps retailers judge a shopper’s financial situation and willingness to pay.

AI then analyses these patterns to predict what price each consumer is most likely to accept. The technology can test small price changes and adjust them in real time, creating an automated system that constantly learns from every customer interaction.

The FTC’s 2024 report on surveillance pricing described how this works in real scenarios. For example, a pharmacy might exclude loyal customers from discounts because it assumes they would buy the product anyway. A car dealership might charge a first time buyer more because it assumes they are inexperienced. Even actions like adding something to an online basket but not buying it can influence later prices.

How Is AI Changing Rental Pricing?

AI-driven pricing has also spread into housing. Software companies such as RealPage provide algorithms that help landlords set rent levels. The Verge reported that RealPage claims its software can “optimise rents” to get the highest overall return for property owners. But critics say this creates unfair market conditions.

In New York, Governor Kathy Hochul signed a new law banning landlords from using price-fixing software. She said these algorithms distort the housing market and have cost US tenants about $3.8 billion in 2024. The law also treats property owners who use the same software as colluding, which violates antitrust rules.

Is Surveillance Pricing Legal In General?

Surveillance pricing is legal in many places, but governments are starting to intervene. Al Jazeera reported that US lawmakers introduced 51 bills in 2025 to regulate algorithmic pricing as last year it was only 10.

In the UK, the Digital Markets, Competition and Consumers Act came into force in April 2025. It allows the Competition and Markets Authority to fine companies up to 10% of global revenue for unfair digital pricing. These rules are meant to prevent hidden or biased pricing practices that mislead consumers.

The FTC advises people to take steps to protect their privacy, though the agency admits these methods are limited. Using private browsers, clearing cookies or opting out of tracking can help, but many companies use device fingerprinting, which identifies users based on their hardware and software.

While consumers can try to limit data collection, the more AI is used in pricing, the more people will continue to face different costs for the same products. Surveillance pricing has turned from a niche experiment into a regular feature of modern shopping that decides how much we pay, often without us even knowing.