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WHAT IS DRIP PRICING?

Drip pricing is a strategy that is used in certain industries that are very much price driven. It consists of revealing the whole price gradually, to draw people into the buying process and make their option seem cheaper than the competition. It is a strategy that is found to a wider degree with online purchasing but not exclusively.

The advertised price gets the consumer interested in the product and as he/she continues with the purchase, all sorts of fees get added to the price: handling, baggage fees, processing fees, printing fees, withdrawal fees, parking fees, etc. It may also be used with elements that are essential to the use of the product/service.

Drip pricing has come under a lot of pressure from governments and other regulatory bodies as it is ethically suspicious. Some airline companies use this technique and strip the price of a seat to its minimum and gradually charge for other features (checked bag, aisle seat, priority boarding, insurance for your trip/luggage’s, onboard meal, etc…). This technique is also used by car rental companies (Avis and Budget had a recent case go against them) and the hotel industry (AirBnB for example with their service fees not included in the initial price) amongst others.

But for online businesses selling to an international customer base it is almost impossible not to drip as some of the “added” costs cannot be anticipated (shipping and duty taxes for example). Having an all-inclusive price would prove to be very risky and there would be huge variations from region to region mainly due to regional taxes, highly variable shipping prices and local policies.

So try to use this technique only for costs that cannot be controlled by your business such as shipping and taxes/duties. Other reasons for using this strategy should be avoided as it can frustrate your customers who find out the “real” price of what they are buying only after having spent a good amount of time in the buying process.
 

Stéphane Elmaleh-Riel, B.Ed., MBA
Marketing consultant

 

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Ref.:

http://theprovince.com/news/local-news/canadian-authorities-consumers-aim-to-put-squeeze-on-drip-pricing
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04099.html http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/vwapj/cb-digest-deceptive-marketing-f.pdf/$FILE/cb-digest-deceptive-marketing-f.pdf