Drip pricing costs online consumers in the UK £1.6bn a year, with hidden obligatory fees boosting the price of things like flights, concert tickets and train rides. Here, author Patrick Fagan explains how psychology makes the technique so successful for businesses.
The practice of drip pricing - where only part of a product's price is originally advertised, but hidden obligatory fees push up the final cost - has become"widespread" in the UK, according to the government.On 4 September, the government put forward a proposal to crack down on hidden charges for online consumers.
It came after new research from the Department for Business and Trade , which said drip pricing has been used by 54% of providers in the entertainment industry, rising to 56% in hospitality, and to 72% across transport and communication sectors.A prime example of drip pricing is a cheap flight that only looks good because the airline has hidden extra costs for things like luggage fees, offers of faster boarding, travel insurance and picking your seats.
As a result of the practice, UK online consumers are being charged £1.6bn a year, the government said.This could mean the adding drip pricing to a list of commercial practices considered to be unfair and so prohibited under the Digital Markets, Competition and Consumers Bill, or making it a requirement that information about mandatory fees is presented to consumers at the start of the purchasing process.
The book, which explores the most deceptive techniques in an attempt to expose the hidden tactics used to influence people, explains that as humans, we are all cognitive misers. This means we have relatively small brains for dealing with the universe's infinite choices, so we have to rely on fast, subconscious shortcuts to make our decisions, Mr Fagan says.
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