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When Higher Prices Are More Attractive

05 Sep 2003 by Matthew Linderman

Luring customers with higher prices? Online merchants are doing just that by becoming more upfront about what they charge (NY Times). The article talks about how sites are getting better at disclosing the real selling price of goods and services (after taxes, fees, and shipping charges).

Not surprisingly, complaining customers helped bring about the change. Travelocity’s COO says, “We have tons of information from our call centers about the frustration consumers feel when they’re at the rental counter and they see all those extra charges.”

Nice to see that truthful pricing is getting closer to the surface. Another good example of this is at shopping comparison sites, like Dealtime or Pricegrabber, where you can enter your zipcode and compare the total cost of products, including shipping.

9 comments so far (Post a Comment)

05 Sep 2003 | JF said...

It's a shame the "Total Price" is considered a huge leap forward. I'm glad it's here, but it's a joke it's taken this long.

07 Sep 2003 | edmz said...

I got so used to this that I usually add a shop-online-for-travel-stuff tax of 30%.

08 Sep 2003 | Michael Spina said...

The next step will be to make things like "concession recovery fee" go away.

08 Sep 2003 | Benjy said...

I've always found it frustrating how some items are advertised for their full price, but others are listed at a price very different from the actual cost. While travel is one example, there are countless others. Why are beds advertised as $xxx each piece for a mattress and box spring, but if you only want a mattress it's about $75 of the price? Or why are speakers advertised individually when they are sold and boxed as a pair? Why are destination charges, advertising fees, etc. added to the price of a car? You don't get up the register with a gallon of milk or a CD and have them add to the price the cost for advertising and transporting the goods to the store--it's built into the price.

08 Sep 2003 | One of several Steves said...

At least with car rentals, I think this was for a long time and easier-said-than-done thing, which is why it's taken so long. Every location is going to have a myriad of different tax structures. Even in the same city, it's going to vary by location; rent at O'Hare, and there's some sort of airport tax that's not part of the fee if you rent from the same agency from their Loop location. Since the rental agencies themselves don't include this in the price they send out to the reservations databases, the travel agents have to go through the legwork of getting the tax info themselves.

Car prices: More and more manufacturers are including the destination charge in the MSRP (my current client does this). Advertising costs are not listed as a separate item that I've ever known of. Nor is dealer holdback, except for Mitsubishi. (At least that was their practice in the past; may not be the case anymore.)

09 Sep 2003 | Brad Hurley said...

Given the discusion on taxes in "Politics Politics Politics," I wonder if prospective employers could start doing a variation of this price-quote scheme when quoting salaries: instead of telling you what your gross income would be, why not just quote your net pay? That way you won't be disappointed everytime you get a paycheck.

Why do we even think in terms of gross income?

09 Sep 2003 | One of several Steves said...

Nice idea in theory, Brad. But, let's say both you and I are quoted the same gross salary. Should the business really figure out each of nets are, because I'm single and therefore have one tax bracket, single rate for insurance, etc., but you're (for sake of this argument) married and in a different tax bracket, pay different rates for insurance, contribute more to your 401(k), etc.? I dont' think so.

09 Sep 2003 | Brad Hurley said...

Duh, yeah, I didn't think of that ;-)

20 Dec 2003 | activex said...

I think that highter prices are more attactive in luxury stuff.

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