New UK government legislation outlawing forms of ‘drip pricing’ threatens online profit margins
Caveat emptor, buyer beware, has always been sage advice. When it comes to ‘drip pricing,’ even more so.
As The Guardian says, “Drip pricing occurs when consumers are shown an initial price for an item or service, only to find additional fees are revealed later in the checkout process.”
It has long been a bugbear for consumers. “They make it appealing for the prices and offers but take part of it back in the hidden charge,” a typically irritated respondent told Which consumer research.
‘Dripping’ is ubiquitous in digital commerce. With airlines, food apps, and entertainment sites being some of its principal exponents.
“More than half of entertainment providers, 56% of the hospitality industry, and 72% of the transport and communication sectors use the practice, according to the government,” comments The Guardian.
And the Department for Business and Trade estimates that every year, unavoidable fees cost consumers £2.2bn. But the new legislation – the UK Digital Markets, Competition and Consumers Bill – is about to change that.
When the rules come in this year, fees that are mandatory (not optional e.g. airline seat and luggage upgrades) will have to be included in the headline price or at the start of the shopping process.
So, what you see, will be what you pay.
“Today’s announcement demonstrates the clear steps we’re taking as a government to ensure customers can compare purchases with ease, commented Minister for Enterprise, Markets and Small Business Kevin Hollinrake.
Good news for consumers, then. But not for retail profit margins.
Caveat venditor, seller beware.