Why Drip Pricing Sucks (And What's Happening To Stop It)

You might not know what "drip pricing" is, but if you've ever shopped online, chances are you've experienced it. Here's what it is, and why the fact that the consumer regulator is about to crack down on abuses of it is good news.

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Rod Sims, the chairman of the Australian Competition and Consumer Commission (ACCC), offered a succinct definition of drip pricing during a speech outlining the main compliance goals for the ACCC today:

Drip pricing involves the incremental disclosure of fees and charges over an online booking process. It causes both competition and consumer detriment. Consumers see a ‘headline’ price advertised at the beginning of the booking process but when they progress to the payment phase, additional fees and charges have been added. Consumers purchasing airfares or sporting event tickets are all too familiar with this practice. Drip pricing involves a lack of transparency which may mislead consumers, and it can also make it difficult for businesses to compete on a level playing field.

It's worth pointing out that airlines and other businesses are already obliged to include compulsory fees and charges (such as airport taxes) in prices quoted to consumers. It has been illegal to display "component pricing" since 2009. However, that doesn't stop airlines throwing on additional charges: baggage, seat selection, insurance and credit card fees are the most obvious examples.

In many cases these are automatically 'ticked' and you have to specifically remove them. Ticketing agencies are another obvious offender (is there anything more annoying than being charged a fee to print your own ticket?)

Another drip pricing offender is credit card fees. Businesses aren't supposed to charge fees for processing credit cards that are wildly excessive — they can recover costs, but they aren't supposed to make a profit. However, while that law came into place in March last year, we haven't yet seen any changes to the fees charged by the major airlines.

The ACCC says that drip pricing is in its sights, and that we can expect to see "enforcement action" in this area shortly. That doesn't mean that drip pricing will disappear altogether — there's a legitimate need to (for instance) choose to fly without luggage and save some money. But if we could see options deselected by default, rather than automatically added, that alone would be a big improvement.


Comments

    Jetstar, screw Jetstar. Please don't automatically decide that I want to pay extra for selecting my seat, then automatically choose a seat on my behalf... Are you kidding?

    The whole "Print your own ticket fee" is such bullshit! They even charge you if you want it sent in an email!

    Ticketek are the leaders in this area god I hate them with the power of a thousand suns!

      The whole event/promotion industry in general is guilty of this. Tickster, Moshtix etc are just as bad as Ticketek. If you advertise tickets to an event for $x, it should cost $x, not $x plus:

      * "booking fee" (especially when you have no possible option to buy without the fee - it should be part of the advertised price)
      * credit card surcharge (especially when the only reasonable payment method offered is credit card)
      * delivery (especially when it's a digital ticket)

      etc

    Paying a fee to print out your own ticket at home is just plain wrong, Ticketek being the best known for doing this is the absolute scourge when it comes to the drip pricing practice. I refuse to attend events where Ticketek are involved. This also explains why I would rather see a band down at the pub, because I know the money is going to the right entities.

    @lemontag " I refuse to attend events where Ticketek are involved..."

    Presuming you put Ticketmaster in the same category, as they do the same charges and fees, it must severely limit your mainstream entertainment and sporting choices.

    I also loathe these obnoxious charges and fees for printing or email my own ticket, and the drip-feed pricing (learnt a new term today) but you have to be pragmatic about it... we all know by now what the deal is before we sit down to buy tickets... you just factor it into your total pricing... buy your tickets, and enjoy the event.

      You haven't actually learnt the term yet lol. It's called 'drip pricing'.

      Yes I'd throw Ticketmaster in that mix. But limited? No not really, sporting events aren't my thing and if your referring to mainstream music like Justin Beiber or Taylor Smith I pretty sure I'm cool with missing out on them. Considering most bands I see are usually those that tour the pub/club circuit and unlikely to fill places like Rod Laver.

      Namely one place that attracts fairly decent bands is the Corner Hotel in Richmond, and at the very least they are upfront with the ticket pricing and quote a total price with no hidden extras. The way it should be done.

    I work for a company that does this, and its not as easy to fix as people imply. For example, credit card fees are worked out on a percentage basis of the whole transaction, how do you know what to add to the booking process at the start before all products are added?

      Hmm, tough one, let me think - how about a percentage?

      yeah what he said, you could easily note that there is a 2% credit card fee on the initial booking page, users could then calculate the cost before going any further if it is a concern to them

        Or, as it's a web site and most people will pay by card, just include the card fee in the cost of the ticket/item. That's exactly what every other business does - include the cost of the sale (CC fees, web site hosting, power, wages, property costs etc.) in to the calculation of what to charge. If they don't they go out of business very quickly.

      A percentage added on to individual items will equal a percentage added on to the whole transaction. Here's an example: I purchase a $100 ticket, and a $50 ticket and pay for both with my credit card which attracts a 2% surcharge.
      (100 x 1.02) + (50 x 1.02) = 153
      (100 + 50) x 1.02 = 153

      Welcome to primary school mathematics.

    Even Event Cinemas do it! Book online and they charge you an extra $2.50 (i think it is) for a "booking fee", which is bull crap because:
    A: why pay more when it's actually cheaper for them (not using staff at box office).
    B: a " booking fee" usually means the entirity of the booking, where as they charge per ticket. So you buy 5 tickets, you get charged 5x the "booking" fee.

    Car rentals are the worst offenders a $52 a day car cost my work $113 after location fee, booking fee some random taxes blah blah. What a rip.

    Car rentals do it, Real estate holiday rentals do it. The list seems to never end.
    Ever been to a car auction and looked at the massive extras added on there.
    It will be great if they can make it stop.
    For every fee listed there should be a credit box already ticked for the same amount.

    Did the kids' annual school text book orders before Christmas with Campion.

    Campion charge a delivery fee equivalent to Australia Post parcel mailing to email access codes for online textbooks.

    Grays online used to not include their 15% markup when you bid on goods, not sure if they still do... gave up on them ages ago.

    @anguskidman Have you considered approaching The Checkout guys about this? It sounds right up their street. Whether any change can be prompted is another matter but exposure on the ABC is worth a go ... and might incentivise the ACCC to expedite progress.

    Last edited 22/02/14 1:23 pm

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