How Companies Use ‘Drip Pricing’ to Charge You More

Imagine you need to buy a airline ticket for your cousin’s wedding. You find what you think is the best price available to your destination. But the airline you chose charges for a carry-on, which isn’t included in the base price, so you add that as well. You also pay extra so you can snag a window seat. Oh, and wait, you need to check a bag, and of course there’s a fee for that. By the time you get to your checkout, there are other fees you didn’t expect, like a fee for printing your boarding pass, in-flight amenities, and more. The price is way more than you were initially quoted, but you can’t back out now. You already did all that work. And plus, it can’t be that much more than any other airline, right? You book the tickets and move on—because, honestly, who has time to open another tab and do that whole process again with a different airline?

You’ve fallen right into the drip pricing trap.

How businesses use drip pricing to charge you more

Businesses use a technique called “drip pricing” to take advantage of people who shop online, according to the Federal Trade Commission. “The term drip pricing refers to the practice of a seller advertising part of the price of a product or service and then revealing additional fees/surcharges after the purchase process is underway,” says Dr. Shelle Santana, assistant marketing professor at Bentley University.

Basically, people will compare the initial price of a product with competitors, but then, as you start adding on other amenities, like that well-deserved window seat, you’re less likely to open a new tab and compare the final price with a competitor. So you likely end up paying more money, often unnecessarily, because the hassle of comparing final prices is just too much bother. Harvard Business School says we often don’t think it’s worth it to start again—and we pay for it.

According to a study from the Journal of Economic Behavior & Organization, consumers can get discouraged from finding better deals due to drip pricing, leading to more profits for businesses that practice it. How much more varies by business, but as an example, a study from Marketing Science found that StubHub increased its revenue by 20% when engaging in drip pricing.

How to stop falling for drip pricing

President Biden is working on doing something about junk fees in general, but we don’t need to depend on the government to start doing something about it. The good news is that drip pricing is a psychological tactic, so we can fight against it. The term for that feeling of resistance against starting all over again is called present-bias preference. You value what’s immediately in front of you more than what’s further into the future. Half the battle is won once you understand how present-bias preference works and can make informed decisions.

Maybe it’s that threat from Biden’s promise of a crackdown on junk fees, or perhaps it’s all the bad publicity that drip pricing has gotten, but some apps notorious for drip pricing are implementing methods for you to see prices more transparently. Airbnb has a “display total prices before taxes” toggle option, and Gametime, the last-minute event ticket resell company, has an “all-in-pricing” feature on settings that you can turn on to see prices with taxes and fees upfront.

If you know drip pricing affects your buying decisions, try to avoid buying from companies that engage in the practice: UberEats, eBay, Lyft, Instacart, Etsy, Ticketmaster, Postmates and StubHub are some of the well-known companies that use drip pricing, according to the Wall Street Journal. If you notice drip pricing during your shopping, find a different company to give your money to.

Also, try to make it easier for yourself. If you know you’re less likely to want to compare prices on your phone, only shop on your computer. And use tools like Honey and Camelcamelcamel (only for Amazon) to price-check multiple websites and even price histories to see if it’s the right time to buy. For travel, you can use tools like Travel Arrow or these websites to make sure you’re getting the best deal possible.

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