Dynamic pricing refers to price changes in line with demand. Which of the following statements is true?

• A. Pricing based on production costs plus margins.
• B. Dynamic pricing uses fixed prices regardless of demand.
• C. Price changes in line with demand.
• D. Prices are set by a single price point for the product life cycle.

Answer: (C)

Dynamic pricing is about adjusting prices as demand changes. When demand or capacity pressures shift, prices move to reflect customers’ willingness to pay and to optimise revenue and utilisation. The statement that prices change in line with demand captures this idea directly, making it the true description of dynamic pricing.

Other pricing approaches describe different ideas: pricing based on production costs plus margins focuses on costs rather than demand; fixed prices regardless of demand ignore demand signals; and a single price point across the product’s life cycle uses a fixed price that doesn’t adapt over time.