What is Drip Pricing?


10:50 AM

1 min read
What is Drip Pricing? Blog Image


The Centre recently warned about “drip pricing”, saying it can surprise consumers with “hidden charges”.

About Drip Pricing:

  • Drip pricing is a pricing technique in which firms advertise only part of a product’s price and reveal other charges later as the customer goes through the buying process.
  • Drip pricing may initially withhold unavoidable fees, such as booking, service, resort, or credit card fees, local hotel taxes, or any other add-ons like internet access or certain facilities and amenities that are required to use a product or service.
  • These additional and often mandatory costs are then disclosed by the seller one by one or “dripped” to the buyer at the point of purchase.
  • It is commonly used in the hospitality and travel markets, as well as for other online payments. 
  • Companies may utilize a price-dipping approach in order to entice a customer into starting the purchase process, at which point the customer may not want to restart his or her search, once they find out the added costs.
  • It can be frustrating for consumers, who typically want to know upfront how much a product or service will cost, and may feel duped by later add-ons.
  • Drip pricing can make comparison shopping more difficult and penalize sellers who are more transparent with their pricing.
  • An example of price dipping is the cost of an airplane ticket that doesn't include baggage fees. 

Q1: What is Predatory Pricing?

Predatory pricing is the illegal business practice of setting prices for a product unrealistically low in order to eliminate the competition. Predatory pricing violates antitrust laws, as its goal is to create a monopoly.

Source: Centre issues warning against ‘drip pricing’. What is it?