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’.
Airlines often advertise cheap flights on the front page of their websites. However, the price increases at each step of the purchase process as taxes, fees and airport charges as well as a surcharge for paying by credit card or against an invoice are added.
Another technique that online retailers use is to incorporate a step into the purchase process at which buyers are offered optional extras, which the retailer has pre-selected on the page.
Some airlines pre-tick boxes for optional extras (such as insurance).
Where does drip pricing occur and how can I spot it?
Drip pricing is particularly common among online retailers of flights, holidays, hire cars and tickets to various kinds of events and concerts. To spot drip pricing, look for the following signs:
- The total price of goods and services, including taxes, postage and other surcharges, has not been stated clearly.
- Only a ‘from’ price has been given.
- Optional surcharges add up as the purchase process progresses.
- What is included in the surcharges or what they relate to has not been explained clearly.
- Boxes for optional extras that are not included in the advertised price have been pre-ticked
Financial implications for consumers
Drip pricing is designed to deceive consumers into thinking that goods and services are cheaper than they actually are. Drip pricing results in consumers
- perceiving offers as being better than they actually are,
- not comparing prices to find the best deal,
- finding it difficult to compare prices, as drip pricing gives a false impression of cheapness,
- tending not to opt out of pre-selected extras, as default settings are perceived as favourable and therefore worth keeping, and
- having to make several choices during the purchase process, which makes them more committed to the purchase. Consumers tend not to pull out of the purchase even when the surcharges begin to add up, as they have already spent a considerable amount of time on the process and gone through the effort of filling in their information. Many end up buying the product or service because they do not want to have to begin the process again on another site.
Consumers’ ability to customise goods and services purchased from online retailers must be based on selecting optional extras voluntarily and not on needing to opt out of pre-selected extras if they do not want to pay for them.
What can I do?
Be vigilant and keep in mind that drip pricing is a common practice among online retailers. Drip pricing is particularly common among online retailers of flights, holidays, hire cars and tickets to various kinds of events.
Compare the prices of several retailers. Be prepared to pay more than the advertised price.
Pull out of the purchase if it involves selecting extras that carry a surcharge. Find out the total price first and think carefully whether you want to make the purchase.
Untick any boxes for optional extras that you do not need. Check your order carefully before proceeding to payment.
Report any problems to the consumer authority. The Consumer Ombudsman monitors compliance with the laws on drip pricing, and reports received from consumers provide valuable information for detecting illegal practices.