For many customers, shopping online has become their favourite method of doing so. However, have you ever considered how these internet companies are deducting costs from your paycheck? You think you will have to pay the price that is first displayed, but you end up paying a lot more than that at the end of the purchasing procedure. The nicest thing is that you assume that the extra fees you are requested to pay is totally normal. We refer to this as DRIP Pricing. Let's examine drip pricing in more detail and discuss how to deal with it.
WHAT IS DRIP PRICING
In online retail, drip pricing is a sales strategy where a headline price is first promoted at the start of the buying process. Nevertheless, the complete and accurate ultimate price is only revealed gradually, following the consumer's time and effort-intensive decision to buy. In essence, it's a technique to increase a product's price after luring a buyer into the transaction. Highlights of drip pricing include the following:
1. First Attraction
Companies employ drip pricing to pique a customer's curiosity by offering a headline price that is deceptively low. The customer is drawn in and motivated to complete the transaction by the initial low price.
2. Incremental Disclosure
New fees, taxes, or charges are progressively disclosed to the customer as they move through the purchasing process. These additional expenses are frequently hidden from the consumer up front, leaving them open to unpleasant surprises.
3. Controversy and Consumer Deception
Because drip pricing partially withholds the actual final price from customers until a later time, it may give rise to controversy. Businesses with more open pricing policies may find it more difficult to compete fairly as a result of this lack of transparency, which can also distort the market.
4. Law and Regulation
A number of states have passed legislation making the drip pricing of levies, fees, and surcharges illegal. For instance, shops are required to incorporate value-added tax (VAT) in pricing provided to customers in the European Economic Area and most of Europe. Additionally, default selections of additional drip-priced charges, such pre-ticked boxes on websites, are prohibited by regulations
5. Effectiveness
Research continuously demonstrates that when price tags are tax-exclusive—that is, the base price is displayed without taxes—than when they are tax-inclusive, buyers will typically spend more. Customers tend to "anchor" onto the base price and underestimate the entire cost when minor charges (like as surcharges) are added later, which explains why this strategy works so well.
In conclusion, drip pricing is a tactic that may surprise customers by offering a low starting price and then gradually disclosing additional expenses. Although it might increase sales, it also brings up moral questions and in certain countries may be against consumer protection laws.
EXAMPLES OF DRIP PRICING
1. Airline Tickets
During the booking process, airlines frequently present a base pricing for a flight ticket; however, extra fees (including luggage fees, seat selection fees, and fuel surcharges) are disclosed later. The total cost may rise sharply as a result of these additional expenses.
2. Hotel Reservations
Online hotel reservation platforms could display a cheap nightly rate, but other costs (such resort fees, parking fees, or taxes) are tacked on at the time of check-out. Often, these costs are never made clear up front.
3. Rental Cars
While car rental companies offer a daily rate, the total cost of the rental includes a number of add-ons such as fuel, insurance, and airport fees. In general, these bonuses are shown after selecting a vehicle.
4. Online retail
E-commerce websites occasionally list a product's base price exclusive of handling, tax, and shipping charges. These extra fees are disclosed later on in the checkout procedure.
5. Event Tickets
The initial price displayed may not include service, convenience, or processing costs when purchasing tickets for events (concerts, sporting events, etc.). These costs are included when buying tickets.
6. Online meal ordering applications
Frequently, we observe that the menu on these apps displays a different pricing, but when we get to the final checkout page, we discover that there are numerous fees, such as packaging fees and GST.
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7. Mobile Apps and In-App Purchases
A few mobile apps allow users to subscribe to or make in-app purchases. Although the first download is free, customers must pay extra to unlock all features or get rid of advertisements.
8. Real Estate Transactions
There are frequently unstated expenses associated with purchasing or leasing real estate, including property taxes, closing costs, and legal fees. These costs show up as the transaction goes along.
HOW SHOULD CUSTOMERS PROTECT THEMSELVES FROM DRIP PRICING
1.Vigilance and Awareness
o Keep yourself informed
Recognise the signs and understand what drip pricing entails. Be advised that the price listed at the time of advertising might not include all expenses.
o Go over the small print
Always review the terms and conditions of a product or service, especially the policy part. Keep an eye out for any future fees or charges that may be applied.
2. Comparative Shopping
o Evaluate costs
Compare rates on several websites and from various companies. You can make sure you're receiving the greatest bargain and steer clear of overspending on unstated fees by comparing.
o Look past the price on the headline
Take into account the total cost, which includes all applicable taxes and potential improvements.
o Look for default choices
Certain websites automatically choose extra features or services (that may come with a cost). If there are any services you don't want, uncheck the boxes.
3. Abandon Checkout If Needed
Do not feel pressured to continue if you discover mid-purchase that you are subject to drip pricing. Give up on the checkout procedure and look into alternative possibilities.
4. Express Your Concerns
Express your dissatisfaction with drip pricing. Sincere customer reviews have the power to sway companies' decisions and promote ethical behaviour.
LEGAL PROTECTION AGAINST DRIP PRICING
In India, the Department of Consumer Affairs has released advisories regarding drip pricing. Customers are advised to get help if they discover unanticipated costs as a result of drip pricing. Customers can contact the National Consumer Helpline (NCH) at 1915 or 88000019151 on WhatsApp.
FAQs
1. What Makes Companies Use Drip Pricing?
o Justification: Companies employ drip pricing to draw clients in by offering a cheap starting price (the "hook") and then progressively disclosing more costs. This tactic can boost revenue while lowering the perceived total cost.
o Effectiveness: Research indicates that when prices are tax-exclusive, or the basic price excluding taxes, customers are more likely to spend since they are anchored to the lower initial amount.
2. Is Drip Pricing Consistently False?
o Context Is Important: Not every instance of drip pricing is malevolent, even if it can be misleading if necessary expenses are concealed. Certain fees (like taxes) cannot be avoided and might be revealed at a later time.
o Transparency: This is quite important. To avoid deceiving customers, businesses should divulge all fees in a clear and concise manner.
3. What Distinguishes Transparent Pricing from Drip Pricing?
o Drip Pricing: After the initial price grabs attention, progressively discloses extra expenses.
o Transparent Pricing: Indicates up front the entire cost, including all required extras and levies.
o Consumer Preference: Informed decision-making and trust-building are fostered by transparent pricing.
4. Can Customers Gain from Drip Pricing?
o Mixed Impact: By luring customers in with cheap initial rates, drip pricing can be advantageous. It may, nevertheless, also result in unforeseen expenses.
o Consumer Caution: To prevent surprises, consumers should exercise caution and carefully read the fine print.
