Pricing practice

Recently the Office of Fair Trading confirmed the way some prices are presented tempt consumers into error, that is, they are not crystal clear. An example is ‘drip pricing’ where people who want to buy economy airline tickets obtain a low starting price but end up paying a very different one at the end.  In supermarkets one regularly sees complex pricing in the form of three-for-two offers where one has to calculate the unit price. Another is ‘baiting’ where customers are offered a cheap but time restricted deal, on products they may not immediately want.

Research showed that consumers were worse off in this order of purchasing:

The amazing thing is that although consumers clearly were losing out there were not corresponding gains for the retailers as the sales volumes were almost the same no matter which way the prices were presented. The main effect was on distribution of sales as the first shop visited, sold most goods because consumers grabbed the ‘deals’.