An astonishing 93% of event ticker providers force harmful dripped fees on customers according to a major study commissioned by the UK Government.
An astonishing 93% of event ticket providers force harmful dripped fees on customers according to a major study commissioned by the UK Government.
Estimating the Prevalence and Impact of Online Drip Pricing found that almost all businesses in the sector imposed additional fees — also known as junk fees — on top of an initial price. The survey was conducted by Alma Economics for the Department for Business and Trade.
What is drip pricing?
Drip pricing occurs when consumers are shown an initial price for a good/service (known as the base price) while additional fees are revealed (or “dripped”) later in the checkout process. These “dripped” fees can either be mandatory (e.g., booking fees) or optional (e.g., seat reservation on a flight). This practice means that consumers may be “baited” into choosing a product because of its (low) base price, yet possibly have to pay a much higher price to complete the purchase as consumers do not become aware of dripped fees until they have already started the checkout process.
The 93% figure for event ticket providers was double the figure for the economy as a whole. The study found that 46% of the total 525 online and mobile app providers in the sample included at least one dripped fee. Across entertainment as a whole, 54% of the 92 businesses surveyed charged at least one drip fee.
The most common fee within entertainment are service fees, which are charged by 33% of businesses. Ticket and service delivery fees are charged by 10%, with insurance fees charged by 9%.
Harmful drip fees
Some 93% of dripped fees were also considered “harmful”, which is defined as being a mandatory charge or at least one fee greater than 25% of the product price among the five criteria.
The average for harmful fees across sectors was 47% — around half of the event ticket figure. Some 36% of event ticket providers were guilty of hitting more than three of the five criteria for harmful fees, compared to 20% across the whole economy.
Across subsectors in the entertainment, retail and transport and communication sectors, air travel (80% of providers) and event tickets (79%) have the highest share of providers with fees appearing at least halfway through the checkout process. For example, on one event ticket provider’s website, consumers were informed of a £2.95 admin fee (for a £175 music festival ticket) on the page view immediately before they were required to enter their payment details.
“Our findings demonstrate that greater scrutiny of drip pricing is needed in the UK to protect consumers, with specific focus on the hospitality and entertainment sectors (due to the presence of mandatory fees in these sectors) and service fees (as these fees consistently meet multiple criteria of harm),” the survey’s authors said.
“First, increased transparency around dripped fees (such as presenting all fees included in a product’s total price upfront) allows for greater dissemination of market information and minimises opportunities for potential manipulation of the consumer search process.
“Second, the impact of price competition means that online providers might not be able to unilaterally adopt greater transparency in pricing (moving away from drip pricing strategies) without intervention, as providers who “act first” may lose market share if consumers are deterred by higher initial advertised prices.”