Which Companies Are Using "Drip Pricing" Tactics ?

Just wanted to share an interesting tactic and raise awareness on "drip pricing" used by many companies. I find this tactic very misleading and in a way falls in the grey area of false advertising.

It seems to be used widely by the Airlines industry but now being adopted by many other businesses.

https://passingtime.substack.com/p/perfidious-pricing

EDIT:
What is Drip Pricing?

‘Drip pricing’ is when a price is advertised at the beginning of an online purchase, but then extra fees and charges (such as booking and service fees) are gradually added during the purchase process. This can result in consumers paying more than they initially intended to.

Businesses must be upfront and clearly disclose to consumers at the start of a purchasing process the types of fees that will apply and when.

Consumers should be wary of misleading ‘drip pricing’ practices when shopping online, particularly when purchasing airline, ticketing, accommodation and vehicle rental services.

To try and avoid paying more through drip pricing consumers should:

  • not just focus on the advertised price – add up all the charges together to figure out the total final price you will have to pay and whether this is good value for money
  • be prepared to back out of the transaction and shop around to find a better final price from a competitor
  • look out for pre-selections and make sure to deselect anything that’s not wanted.

https://www.accc.gov.au/consumers/pricing/price-displays#-a-…

Comments

  • +9

    Are you in the US?

    • +27

      AirBNB does it everywhere. Advertised for $199 per night, then slaps cleaning fee, service charge and so on.

      Also recently I started noticing that merchants fees are passed to customers as well. You buy a coffee for $3.70 but the CC terminal says $3.77.

      • +16

        That is not my experience using Airbnb (AU).

        Only the total price is “advertised”. When you click on the total it shows the breakdown of nightly rate and fees.

        All the prices shown on the map etc are the total prices.

        I think it varies by region. Airbnb (US) may show nightly rates everywhere instead.

        • +6

          They recently changed this for the AU site I think. In fact some people in the US use the AU site to browse listings because it shows them the true price up front.

      • -1

        Why wouldn’t that need to be reflected on the receipt?

  • +8

    Not sure that kind of trick would work here. Especially if you're presented with it after the purchase has been made.

    • +32

      Try eating at The Bavarian. AFAIK, they shamelessly do this.

      • +14

        Yep. I'm now actively avoiding this mob and the rest of the Pacific Concepts group. It's a shame because I genuinely like a few of their venues, but I'm not going to subject myself to the risk of a sting.

      • +14

        Yep, everyday has a surcharge, what is that bullshit!

        • +6

          And sometimes multiples too. We decided against dining there when I saw all their surcharges on their online menu.

        • +20

          Never heard of them before (recently moved to VIC from WA so gave them a google. Are they (profanity) serious?

          "Credit cards incur a processing fee of 1.7% to 2.7%. Debit and EFTPOS card incur a processing fee of 0.95%. External payment Apps incur additional fees. 10% surcharge applies on Sundays, 15% on public holidays,
          5% service fee applies Monday to Saturday. Please advise our friendly staff if you require assistance with your dietary requirement "

          • +15

            @wittyusername: "5% service fee applies Monday to Saturday" - I don't understand this part. Just put your prices up by 5% and then charge extra 5% surcharge on Sundays, its the same thing?

            • +1

              @All Blacks NZ: It so when people are browsing the menu before they decide to eat there the prices look lower. So they are hoping people will come if it looks 5% cheaper and don’t realize there is a surcharge until they pay.

              • +5

                @illusion99: I think they're well aware of that. It's the fact it's so blatantly obvious that's what they're doing given they could just up prices by 5%. At a minimum it's hugely unethical.

                • +4

                  @drprox: I agree completely. Also what annoys me to a lesser extent is the 15% public holiday and Sundays surcharge that the majority of restaurants charge. You know exactly how many Public Holidays and Sundays there are in a year so you should be able to build the surcharges into your normal pricing to compensate. What next? A winter surcharge because heating cost is more in winter?

                  • @illusion99: There's a chinese place in chinatown that considers the first day of each month a public holiday… no pic as hands were full.

      • +7

        Came here to say this. Same company as El Camino Cantina. Add 6% service fee Mon-Sat or 10% for Sundays, plus 10% venue fee, plus 10% for groups, plus 15% for public holidays, plus 1.5% card fee. And those compound too. I complained and their management didn’t even know what fees they charge. Unfortunately the Office of Fair Trading hasn’t cared when I reported it and considers it legal seemingly. How they get away with advertising $2 tacos that can only ever be $2.30+ is beyond me

        • +2

          We are becoming like the US. They always advertise things like $1 hamburgers over there. Which is then like 1.07 after they add on sales tax

        • +1

          THis company's real business is in shamless cultural appropriation

      • +1

        Yeah, a 10% online ordering surcharge, but if you ask to order in person then they're confused. I used to go there because the pretzels are nice and they're one of the few places that serve the Austrian schnapps, but they're almost always out of stock of them when I go there. I don't know what's so difficult about managing the stock levels of some items that you can buy from Dan Murphys.

      • +2

        I f'n hate that place, it's a down right rip, and the food isn't that good. My local pub does a schnitty and chips and salad for 10 bucks that's as good as their $30 obscenity. The price of beer there is also obscene

  • +2
    • Only the dumb money shops at reece

      Why pay $7 for a 90degree 90mm m-f stormwater fitting when bunnings sells them for $2.5

      • +69

        Me - "I'm going to Reece"
        My wife & kids - "Ok, bye"
        Total spend - $7

        Me - "I'm going to Bunnings, I'm getting a $2.50 fitting and that's it"
        My wife & kids - "We're coming too"
        Total spend - $150

        • +76

          You - "I'm going to Reece"
          Your wife & kids - "Ok, bye"
          you actually go to Bunnings, but pretend you went to Reece
          Total spend - $2.50

          • +47

            @Miss B: Wife sees bunnings on bank statement. Asks “what else have you been lying about?” Asks for divorce.
            Total spend $2.5 plus child support.

            • +20

              @Ridiculous Panda: pay with cash to avoid that scenario

              • +6
              • +1

                @wiltonson: i have started to carry more cash ….. fruitier has 50c min for credit or eftpos cards …. just wanted the $2.50 strawberries …..paid cash, butcher adds 2% for cards, the good ol days same price for cash or card is still at larger retailers, but some smaller ones are making fine print a nuisance.

            • @Ridiculous Panda: You guys should go do stand-up!

          • @Miss B: Lets be honest. Even without the family along I'm not on a bargain website because I have the self control to go to a store like Bunnings and only spend $2.50!

        • +6

          You - "Im going to Reece"

          Goes to Reece then to the pub, then the cas, rolls home at 3am

          Total spend $3700 :(

      • The common stuff is usually cheaper Bunnings, but some of the Bunnings house brands are terrible quality.

        I live equal distance to both. Occasionally Reece is cheaper for an equivalent item. On plumbing stuff I have no choice as Bunnings sell like 10% of the plumbing stuff I need for DIY.

        I'm not sure if each shop has it's own pricing, so I wouldn't be surprised if others have a different experience.

        • I go to Reece more often than Bunnings for plumbing stuff, but Reece is 5 mins from my house and Bunnings is a 50k round trip. The time+petrol vs cost equation becomes quite different.

        • problem at reece is trade price vs retail …..trade counter for parts charge retail unless you have an account , if you buy bathroom in showroom they price match ….. gottliebs in malvern only have one price , clearly advertised same for trade or retail , cheapest around and below reece trade price …..problem is closed on saturdays …reece is my last resort if i need stuff …..

    • +5

      Reece is mostly for tradies with sales accounts who can directly bill back to clients.
      Having stock always avaliable to complete a job.
      Definitely not a business designed for DIY.

  • +22

    I'd never pay a hidden fee after a meal. I'd also never tip in Australia, unless I was trying to impress a date.

    • +2

      Give part of your tip, to your date?

      • +3

        The waitress gets nothing

        • They could always share… 😛

      • +3

        just pay the date and skip the meal …. oops that’s an escort …..

    • +10

      attracting the wrong type of women bru

  • +18

    Not sure if this qualifies as an example, but we dined at a well-credentialed Melbourne restaurant a few years ago. All good, until the bill arrived which included a "donation" being a % of the bill.
    The donation was to a worthy cause (in my view), but the approach of adding it to the bill without prior advice riled me. I (and others at other nearby tables) questioned it and asked for it to be removed. It was, begrudgingly.

    • +54

      I too hate the donation crap.
      I trust that they will donate, but they'll claim it as a tax deduction and report it as if it was their own generosity.

      • +1

        I only donate if I know the money goes directly to the recipient.

        Also have no problems tipping at restaurants or even other establishments if I received excellent service.

        We all work for a living and sharing a small tip brings joy to others who put in real effort to serve well.

        Have a good week. Cheers.

        • +14

          Why give the restaurant/service provider the tax writeoff.
          Donate directly to;
          1) ensure your donation actually gets to the charity
          2) claim the tax benefit for yourself

      • -8

        If they tried that then the ATO would give them a boot up the bahookie. Your claim is one that's frequently made (I used to think the same) but it is not possible for them to treat your donation as their own for tax purposes. They may (and many have) act like it's their own generosity for publicity purposes, but that's it.

        • +5

          Actually, you're incorrect. It absolutely is a tax deduction for them, and they'd report it as such; however, the initial receipt would also be income, so no net tax for them

          As others have pointed out however, you personally forgo the tax deduction

          • +1

            @RMBC: If they're giving you a bill that separately lists the donation and you get a receipt, you can claim that back yourself (if it's over $2). The company then claiming that same deduction would not be legal.

            https://community.ato.gov.au/s/question/a0J9s0000001EdY/p000…

            • +1

              @banana365: If that were the case, sure, however I'd be very surprised if it were happening that way. Indeed in most instances, the venue that is doing so does not issue a compliant receipt.

              The exceptions are generally businesses who have their own charitable organisations, and therefore have such agency agreements in place.

            • @banana365: From your link, ATO states:

              if the collector is collecting on behalf of a DGR/s of their own accord, and thus there is no formal arrangement in place for it to collect on behalf of a DGR/s, then the donations passed on to the DGR is deductible to the collector only, and not the individual donors. The lack of a formal collecting arrangement will mean that the DGR will recognise the collector as the donor

              So most likely the business will be considered the donor.

              • -1

                @lunchbox99: "Most likely" based on what? Your experience? Your prejudices? "Feels about right"?

                The only companies I've ever had that asked/suggested a donation have either been the big, household name companies that do have arrangements in place with the recipient (based on information provided on the companies' or recipients' web sites) or have had the traditional, charity owned collecting tin next to the till.

                If you've any information that shows the contrary, then I'll willingly change my view.

                • +1

                  @banana365: I highly doubt a Melbourne restaurant has a formal arrangement with the DGR to collect on its behalf. Normally this would be a contractual arrangement. This is an ATO legislative requirement.

                  You can think whatever you want. It's a free world.

                  • @lunchbox99: Doubt all you want, but maybe just ask them rather than assume.

      • You made my fist clench.

      • Yes, I've thought this too

  • +19

    Which Companies Are Using "Drip Pricing" Tactics ?

    Drip pricing is illegal in Australia, lodge a ACCC complaint against the company.

    Bit like this crap chain of stores slapping on a flat 6.5% to the bill. That isn't a surcharge, its a drip feed price increase.

    https://www.news.com.au/national/diners-outrage-over-unexpec…

    • +6

      quality comments on that article 'Forgive my ignorance, but wasn't the Goods & Services Tax (GST) of ten percent supposed to cover business costs? Greedy business owners are putting their hands into our pockets with no shame! Let's name 'em & shame' em. That'll stop these grubby stores from doing it'

      But, yes, its illegal. CC surcharge is legal and in fact was promoted by the ACCC at the time as making it fair so that people paying by cash were not subsidising those paying by CC. However, now that everyone is paying by CC (or debit) its probably something to be reviewed

      • Cash is king and i still pay cash these day whenever i can .

        • Why?

          • @brendanm: Most restaurants which I normally visit gives 5-10% discount when paying cash.

            • @SnoozeAndLose: Wow, well there you go, not too bad.

            • +5
            • +2

              @SnoozeAndLose: Why do they do this? Surely the CC fees are not that high.
              Perhaps they aren't reporting the cash as revenue for tax purposes?

              • +4

                @tensionday:

                Perhaps they aren't reporting the cash as revenue for tax purposes?

                Most likely why they prefer cash.

            • @SnoozeAndLose: yep, local thai is 10% off for cash , but they are in the minority of take always i know.

              • -1

                @garage sale: 10% off for cash should be just as illegal as 11% extra for credit cards. There's no good and legal reason to provide such a disincentive for using card. If you're not paying your taxes you're stealing from everyone.

          • @brendanm: Cash = Symbol of freedom

        • +1

          Cash is backwards and super inconvenient most of the time.

          Rather be earning points and earning interest on the amount I'm not having to pay upfront.

          • -2

            @DingoBilly: Disagree. I detest waiting for people cycling through their cards to find one with a positive balance. When my wallet gets down to $200 or $300 I withdraw another $1000 while shopping, still pay bills online, but at stores I'm paid and gone while they're still arranging their cards in a way that allows their wallet to close.

            • +5

              @[Deactivated]: You ever heard of apple pay or google equivalent? one button and done
              Watch too

            • +5

              @[Deactivated]: I detest people searching their wallets for the right amount of change and/or the retail assistant trying to figure out how to give the right change.

              • -5

                @pikachooo: It takes longer to insert 3+ cards, type in PINs, wait for the accept or rejection, than to simply look down and see the coins you have. ;-D

      • +5

        CC Surcharge is only legal provided they have a method of payment that doesn't incur a surcharge and it is inline with actual costs incurred.

        • +1

          CC Surcharge is only legal provided they have a method of payment that doesn't incur a surcharge and it is inline with actual costs incurred.

          Any links to this?

          I reported Budget a few years back about this very thing. A forced credit card payment surcharge on pickup when they don't accept cash. ACCC said they could do that, which I found to be a load of crap, as it is really drip pricing.

      • +6

        CC surcharge is legal

        CC surcharge should only be legal if the business accepts a form of payment for 'free' aka cash. If they don't accept cash as a payment option, then it too is drop pricing as there is no way around it. So their prices should reflect this up front.

        • which businesses dont accept cash (irl) or bank transfer (online)?

          • +2

            @dtc:

            which businesses dont accept cash (irl) or bank transfer (online)?

            Lots around once you start looking. Car rental places for starters, Budget doesn't accept cash, but then has a forced a CC surcharge. Lots changed during covid.

            The kids swim center does take cash (but they don't charge a CC fee). A few coffee shop places are card only now, with a CC fee. LOL. If you don't take cash, then bake the CC fee into the price.

            • @JimmyF: wood frog bakeries don’t take cash, saves banking at the end of the day or potential robberies, but their prices are clearly marked and that is what you pay on your card ….

              • +2

                @garage sale:

                but their prices are clearly marked and that is what you pay on your card ….

                and that is how it should be. Totally ok with that, not this BS of not taking cash, but oh a CC fee.

                It seems the ACCC has updated the wording yet again, that if there is no 'cash' method for payment, then they can't do price + cc fee. Going to be an interesting time next time I book a budget car!

                The same now needs to be done for surcharges that apply 7 days a week, like a venue surcharge. Its not a surcharge if its all the time.

  • +13

    Not sure if I'd consider it drip pricing but Plush furniture refuse cash payments, but they have a 1% fee to all card payments and online payments. It was only when I asked they did reveal that I can do a direct deposit which required them to email me a form later that day with all the details. Seems their prices should just be 1% higher with no card fee considering the payment options they allow.

    • +3

      Bingo. The irony of it being that the time taken for them to go through all this palaver will end up costing them more in labour than the 1% surcharge.

      • +2

        Its not ironic, it's a tactic they use which works most of the time. Back when we drafted these laws, CC adoption wasn't very high, but the rewards program/points were actually decent. From what I'm told European Union went the other way, and made CC surcharge illegal, because they envisioned that it would become the norm. Perhaps we need to catch up.

        USA is too far behind, with poor voters, corrupt politicians, and bad businesses all working the system to extract as much profit from common folk as possible. It's bad enough that it seaps into Canada and Mexico. But go further out to Greenland or Chile and suddenly those practices disappear.

      • is the fee accounted for/taxed differently on the business side?

        • Shouldn't be. It should be counted as normal income and businesses will do expense on processing fees.

    • Plush furniture refuse cash payments, but they have a 1% fee to all card payments and online payments

      If they refuse cash instore and then ask a 1% CC surcharge, it is then illegal.

      https://www.accc.gov.au/consumers/pricing/card-surcharges

      If there is no way for a consumer to pay without paying a surcharge, the business must include the surcharge in the displayed price.

      I'm not really sure Plushes emailing you a form for a direct deposit cuts it. Seems a little overly complex.

  • Which Australian airlines use drip pricing?

  • +3

    It's being allowed to be introduced everywhere.

    Setting airlines and ticket sellers aside and the abysmal business practices most of them engage in, it started with credit card surcharges, most of which now are anything but clearly displayed and have been allowed to become "expected" in restaurants/cafes.

    Allowing these surcharges (as opposed to simply requiring them to be embedded in the price) has slowly, but increasingly, allowed any number of shady percentages to be added. It's seemingly only a matter of time before before the price of food in a restaurant is exactly that … the price of the food with any number of "surcharges" being added if you want extras like it being cooked and/or brought out from the kitchen for you.

    I fully expect these sorts of practices to be (at least attempted) to be introduced increasingly. It's whether or not consumers collectively allow themselves to be subject to it that will define the outcome.

    • +1

      CC surcharges are not embedded in the price because they are an additional cost for the choice of payment mechanism, so if you embed them in the price then people who dont use CC are subsidising those who are using a CC. Hence if you are shopping at Coles, no CC surcharge, and paying cash, you are probably paying ~0.3% more than you should because you are covering the cost of all the CC users.

      Any other surcharge is not allowed unless clearly displayed. So if you are coming across them, feel free to report it

      • +16

        This argument is a load of cobblers, perpetuated by those who are looking to skim another few points off the punter. Immeasurably more so in the modern environment where cash has all but been eliminated in many businesses.

        Handling cash has similar costs for business, albeit they are more "hidden". There are the costs of counting cash, preparing banking details, reconciling to till rolls, physically taking the cash to the bank, reconciling with accounting systems, etc. that all need to be done in relation to cash.

        While these may not reduce the actual take in the way a card service fee does, these labour costs are still borne by the business and may in fact end up being a higher cost in terms of labour costs than that of the card fees. The all-electronic system takes away many of these costs by automating some or all of the above.

        Furthermore, this doesn't take into account the risk of loss or theft of cash which of course is effectively eliminated by an all-electronic system.

        • There are the costs of counting cash, preparing banking details, reconciling to till rolls, physically taking the cash to the bank, reconciling with accounting systems, etc. that all need to be done in relation to cash.

          These should be considered as the cost to maintaining anonymity and freedom in a functioning democracy.
          There is a 'pain' that we all endure, for something that is worth the 'pain'.
          Replace cash with digital methods, with a central oversight, then you lose freedoms, democracy, anonymity, etc.

          Incoming CBDCs are some cause for concern.

    • +1

      Yup. People need to have self control and vote with their feet. Plenty of other dining options out there. Google reviews too.

      And look at the menu before you dine to check the surcharge.

  • +3

    Definitely been to several bars and restaurants that have unavoidable surcharges. Technically it is documented before you purchase, so it isn't drip pricing. But I hate it. There was one I went to recently which had a 15% surcharge for Sundays/Public Hol, 10% for Saturdays, and 7.5% for weekdays.

    • +1

      name and shame please

      • Pizza chain restaurants have Public Holiday surcharge.

        I don't mind this surcharge, because I have been in shift-work situations before,
        and this surcharge is taking care of those workers
        who give up their weekends and Public Holidays, to serve society.

        This also because the government bodies (Fair Work?)
        ruled hospitality workers have a reduction in their penalty rates
        for work on weekends (Sunday?),
        after the private sector lobbied the government to remove these penalty rates and move to fixed award wages.

        • +6

          I think people should be compensated fairly for their work. Especially those working at inhospitable times. However, my point is that some places are charging a surcharge for every day of the week! There are no days that don’t have one. This just raises the base price by the minimum surcharge and is a deceptive practice.

          Notwithstanding, I could have a whole other conversation about my views on Phol/weekend surcharges at places who’s bread and butter IS the weekend

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