DRIP PRICING - ECONOMY
News: Centre issues warning against
‘drip pricing’. What is it?
What's in the news?
●
The Centre recently warned about “drip pricing”,
saying it can surprise consumers with “hidden charges” and advised them to seek
assistance if they encounter such surges in charges on a product's MRP (maximum
retail price).
Drip Pricing:
●
It is a marketing
strategy where initially only a portion of a product or service’s total cost is
shown.
●
The full price is disclosed progressively as the
customer moves through the purchase process.
Strategy Used:
●
This strategy often involves concealing essential fees like taxes or booking fees, or excluding
necessary add-ons such as internet access or amenities that are essential for
the use of the product or service.
●
The price advertised in print, emails, or on
websites, known as the “headline price,”
may not accurately represent the total cost that the consumer will ultimately
pay.
Why do Companies indulge
in Drip Pricing?
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Businesses use drip pricing to attract customers by starting with a lower price, and hoping that
they will continue with the purchase even after seeing additional costs later.
Impact on Consumer
Behaviour:
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Drip pricing can make it difficult for consumers to
compare prices effectively.
Sellers Offering
Transparent Prices at Disadvantage:
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Drip pricing may put sellers who offer more
transparent pricing at a disadvantage.
Example - Cost of an airplane ticket that doesn't include baggage fees.