Pricing

Price displays

Businesses sometimes list more than one price for the same item. For example, the price displayed on the shelf might be different from the catalogue.

If a business displays more than one price for a product, they must either:

  • sell the product for the lowest displayed price
  • withdraw the product from sale until the price is correct.

If a business has displayed two different prices by accident, they do not have to sell the product for the lower price. They can choose to withdraw it from sale.

If a customer orders a product at an incorrect price, the business must:

  • inform the customer of their mistake before processing the order and
  • give them the choice to continue with their order at the correct price, or cancel it.

Correcting a price

If a business displays the wrong price, they can fix it by:

  • covering up the old price with the new one (in-store displays)
  • publishing a correction (catalogues and ads).

A correction must be clearly visible. For a catalogue or advertisement, it must reach a similar audience to the original publication.

Price advertised is not the full price

Sometimes, businesses promote a ‘component price’ for a product. A component price is a portion of the total cost consumers need to pay for a product.

Businesses can’t do this unless they also state the minimum total cost (‘single price’) of the product.

Single price

The single price is the total of all measurable costs and includes:

  • the total amount of taxes, duties, fees, or levies (such as GST)
  • any additional charges.

The single price must be:

  • clear at the time of the sale
  • equally prominent as the most prominent component of the price.

The single price must include any known delivery charges. This includes when the business is only aware of the minimum delivery charge. For example, online retailers who always charge for postage must include this in the single price.

A single price does not stop consumers or the business from negotiating the price.

Motor vehicles

The most common example of component pricing is in motor vehicle sales. ‘On-road’ costs like transfer duty are usually part of the compulsory cost of the car. Any price listing for the car:

  • must prominently state the minimum total cost of the vehicle, including compulsory additional costs
  • does not have to include the cost of optional extras (such as a sun roof or tinted windows).

Service contracts

Some businesses offer service contracts for periodic payments. The rules for these types of contracts are slightly different. The single price does not need to be as prominent as the component prices.

Food and drink

Restaurants and cafes sometimes include a surcharge on Sundays or public holidays. They may display this as a percentage rate on their menu. This is fine as long as they display it prominently, clearly and transparently.

Food and drink businesses don’t need to produce separate menus for surcharge days.

Was / now pricing

Businesses sometimes advertise savings on products by comparing to their pre-sale price, wholesale price, a competitor's price or recommended retail price (RRP).

Was/now pricing, also known as ‘two-price advertising’ or ‘strike through’ pricing, is where a business advertises that a product was a certain price but is now on sale for a lower price.

Businesses must not mislead or deceive consumers about the savings you may get. Saying that a product ‘was $100 now $50’ or ‘$100 $50’ can be misleading if that product was not sold at $100 for a reasonable period before the sale started.

It can also be misleading if only a small amount of the product’s previous sales were at the higher price before the sale began.

Drip pricing

Drip pricing is where a single price is advertised at the beginning of an online shopping process and additional fees and charges, which may be unavoidable, are made apparent (or ‘dripped’). This can result in the consumer paying a higher price or spending more than they realised they would.

When shopping online, consumers should:

  • be aware of misleading drip pricing practices when shopping for services, particularly in the airline, ticketing, accommodation and vehicle rental sectors
  • consider all applicable charges together – don’t just focus on the advertised price since this may not be the cheapest final price. It is also a good idea to shop around
  • be prepared to not proceed with the transaction, especially when additional charges start being added
  • look out for pre-selections and reject anything you do not want to include in the purchase. Thoroughly check the booking before making any final payments.

Component price

Sometimes, businesses display a ‘component price’ for a product. A component price is a part of the total cost needed to buy the good. Businesses can only do this if they also state the minimum total cost (‘single price’) of the good.

Total cost

The total cost or single price of a good is the total of all costs and includes:

  • the total amount of taxes, duties, fees, or levies (such as GST)
  • any extra charges.

The total cost must be:

  • clear at the time of the sale
  • as clear as the most visible part of the price.

The total cost must include any known delivery costs. This may include items such as, postage charged by online retailers.  A total cost does not stop consumers or the business from agreeing on a price.

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