As AI continues to redefine the boundaries of business optimization, a growing debate has emerged around the ethics of AI-driven pricing. The recent controversy surrounding Delta Airlines’ CEO and the suggestion of “personalized pricing” has rightly triggered public backlash. It also opens an important industry-wide conversation: how should AI be used in pricing and where do we draw the line?
Personalized pricing—where different people are charged different prices for the same product or service based on personal data—is more than controversial. It’s exploitative.
Why This Moment Matters
There’s a growing risk that public perception will start to treat all AI-powered pricing as suspect, simply because some approaches cross ethical lines or are misunderstood. That would be a mistake and a missed opportunity.
Personalized pricing based on individual data points is just one (problematic) branch of AI pricing. We need to distinguish between exploitative personalization and market-driven dynamic pricing, before the entire category becomes unfairly discredited.
AI has the potential to make pricing smarter, fairer, and more adaptive but only if we’re clear about how it’s being used.
The Ethical Line: Personalized Pricing vs Market-Based Pricing
Personalized pricing might sound innovative, but it crosses a dangerous line. By using personal data—like customer profiles, demographics, or income proxies—AI systems can charge people different amounts for the same service based solely on who they are. This erodes trust, undermines fairness, and introduces bias that’s hard to detect, let alone correct.
Worse, it treats the individual as a target for extraction, not a participant in a fair transaction.
But AI doesn’t need to work this way.
There is a better path: pricing that adapts to changing market conditions, not personal identity.
This is where Causal AI comes in.
Enter Causal AI: Learning From Demand
Causal AI represents a new class of machine learning that focuses not just on correlations but on cause and effect. In pricing, this means understanding how market-level demand changes in response to different pricing strategies.
Instead of asking, What is this individual likely to pay?, dynamic AI-pricing asks What is this particular room on this night worth? It’s similar to how the market dictates the price of gold, it’s only worth what the market is willing to pay at a moment in time, but the entire market gets the same price at the same moment.
This shift is profound and powerful because 1) It enables dynamic pricing that adjusts in real time to demand conditions. 2) It avoids using sensitive personal data, focusing instead on observable patterns in aggregated behavior. And 3) It is explainable, because causal models reveal the “why” behind pricing decisions, not just the “what.”
In short, causal AI enables pricing strategies that are not only effective, but also ethical and accountable.
Transparent Pricing Builds Trust—and Performs Better
Causal AI doesn’t just avoid the pitfalls of personalization. It offers tangible advantages:
- Greater transparency: Businesses can clearly articulate how and why prices are changing.
- Fewer regulatory risks: Avoiding personal data sidesteps many emerging privacy and fairness concerns.
- Better long-term outcomes: When customers trust the pricing process, they’re more likely to return—and recommend.
Dynamic pricing doesn’t have to mean dynamic trust. With causal inference, businesses can adapt intelligently to real-world conditions without alienating their customers.
A Call to the Industry
This moment, sparked by growing public concern, is a chance for our industry to reset. Let’s reject opaque personalization models in favor of methods that align with fairness, transparency, and trust. Let’s embrace AI not as a black box that guesses willingness to pay, but as a tool to learn how markets respond to price, and to act accordingly.
If we don’t make this distinction now, we risk AI pricing being misunderstood and rejected wholesale by consumers, journalists, and policymakers alike. That would be a disservice to the real innovation happening in this space; innovation that can improve outcomes for businesses and customers alike without compromising ethics.
Whether you’re a hotelier, an airline, a retailer, or a technologist: if you’re thinking about how to apply AI to pricing, start with this question: Am I learning from demand? Or am I profiling the customer?
The difference matters more than ever.
TakeUp ensures pricing is fair for both sides—maximizing what your property is worth in the market while aligning with what markets are willing to pay at any given moment. Visit takeup.ai to learn more.
TakeUp is an AI-powered revenue optimization platform built for independent hospitality properties, including boutique hotels, inns, bed & breakfasts, and glamping retreats. By leveraging AI-driven insights and expert revenue strategists, TakeUp helps properties maximize revenue and save time, seamlessly integrating with leading property management systems to drive profitability and operational efficiency. For more information visit takeup.ai.
Kelly Campbell
Marketing Director
TakeUp
