Jump to content

Drip pricing

Edit links
From Wikipedia, the free encyclopedia

This is an old revision of this page, as edited by Northamerica1000 (talk | contribs) at 19:20, 30 August 2015 (→External links: fm). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

  • Comment: Only one industry sector is mentioned under the "Drip pricing by industry sector" thus the heading is redundant. Remove it or add more content about other sectors. Roger (Dodger67) (talk) 18:27, 30 August 2015 (UTC)

Drip pricing is a technique used by online retailers of goods and services whereby a headline price is advertised at the beginning of the purchase process, following which additional fees, taxes or charges, which may be unavoidable, are then incrementally disclosed or "dripped". The objective of drip pricing is to gain a consumer's interest in an attractively low headline price, but the final price is not disclosed until the consumer has invested time and effort in the purchase process and made a decision to purchase. Naïve consumers will purchase based on headline price and sophisticated consumers will consider total cost when comparing offers. Drip pricing can distort competition because it can make it difficult for businesses with more transparent pricing practices to compete on a level playing field.[1][2][3]

Many jurisdictions have enacted legislation to outlaw drip pricing of fees, taxes and surcharges. For example, throughout the European Economic Area and most of the rest of Europe, retailers must include VAT in prices given to consumers. Some jurisdictions also outlaw the default selection of additional drip-priced charges such as pre-ticked boxes on websites; the United Kingdom's Regulation 40 of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 is an example.

Drip pricing by industry sector

Airlines

Drip pricing of unavoidable additional charges on air fares is outlawed in the European Economic Area. Article 23 of Regulation (EC) No 1008/2008 requires that "The final price to be paid shall at all times be indicated and shall include the applicable air fare or air rate as well as all applicable taxes, and charges, surcharges and fees which are unavoidable and foreseeable at the time of publication". In the early 2010s, many budget airlines sought to circumvent this requirement by adding surcharges for the most common means of payment. For example, Ryanair surcharged £6 per passenger per flight segment to process a single debit card payment whose cost was only a few pence. Article 19 of Directive 2011/83/EU on Consumer Rights has limited such payment surcharges to "the cost borne by the trader" since 13 June 2014, but because of the prevalence of these surcharges, the United Kingdom enacted the legislation earlier than required with effect from 6 April 2013 under the Consumer Rights (Payment Surcharges) Regulations 2012.[4][5][6]

In mid-2014, the Australian Competition and Consumer Commission took legal action against Virgin Australia and Jetstar Airways in respect of drip pricing.[7][8]

Event ticketing

The primary and secondary ticketing industry has faced considerable scrutiny in the United Kingdom. Many event organisers and secondary ticketing agencies, in addition to any published markup contained within the headline price, add unavoidable delivery fees for tickets later in the purchase process, even when customers print their own tickets or collect them from a box office. [9]

References

  1. ^ Fletcher, Amelia (21 May 2012). "Drip pricing: UK experience" (PDF). Federal Trade Commission. Office of Fair Trading. Retrieved 21 August 2015.
  2. ^ "Drip pricing". Australian Competition and Consumer Commission. Retrieved 21 August 2015.
  3. ^ Safi, Michael (19 June 2014). "Virgin Australia and Jetstar face legal action over 'drip pricing'". The Guardian. Retrieved 21 August 2015.
  4. ^ "Excessive card surcharges will be banned, says Treasury". BBC. 23 December 2011. Retrieved 21 August 2015.
  5. ^ "Airlines include debit card charges in headline price". BBC. 5 July 2012. Retrieved 21 August 2015.
  6. ^ "End to Ryanair debit card tricks as budget airlines forced to include payment fee in ticket price". This is Money. 5 July 2012. Retrieved 21 August 2015.
  7. ^ Han, Esther (19 June 2014). "Jetstar and Virgin taken to court for drip-pricing tactics". Sydney Morning Herald. Retrieved 21 August 2015.
  8. ^ "ACCC takes action against Jetstar and Virgin for drip pricing practices". Australian Competition and Consumer Commission. Australian Competition and Consumer Commission. 19 June 2014. Retrieved 21 August 2015.
  9. ^ "Can I avoid hidden ticket charges?". Consumers' Association. Retrieved 30 August 2015.
Retrieved from "https://en.wikipedia.org/w/index.php?title=Drip_pricing&oldid=678648991"