CONSULTING
CONSULTING
Buying Blind:
Information & New Regulations to Curb Drip Pricing
Leigh Thomas
July 2025
One Drop at a Time
Drip pricing is a pricing strategy that many sellers use to manipulate consumers into purchasing products. Drip pricing occurs when the seller advertises a product’s price incompletely by intentionally leaving out fees, taxes, and surcharges that will be added later. These additional costs are usually added in gradually, one “drop” at a time, to reveal the final cost after the customer has spent considerable time and energy shopping. Drip pricing has been a topic for customers and policymakers for years now and may be gaining some attention from lawmakers to protect customers.
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Drip Pricing at Vacation Time
Ecommerce and hospitality services use drip pricing extensively. We are all familiar with the price comparison shopping extravaganza we must endure when we go on vacation. Every flight, hotel room, rental car, and basketball game ticket show a price at the initial search. We feel excited at the reasonable cost but know we must continue to the final checkout screen to get the real total. We dig through all the questions, information, and approvals to eventually arrive at the final price; our emotions plummet from excitement to sorrowful resolve. At this moment, we weigh all the time and energy spent on this shopping quest and sometimes pay way more than we planned just to save ourselves from repeating the emotional roller coaster with another vendor. Drip pricing often persuades consumers to make purchases they would not have made had the total price been revealed at the initial search.
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An Emotional and Economic Problem
In addition to the emotional deception, drip pricing costs consumers a lot of money. This salesman tactic hinders customers from the education they seek (we’ve written before about today’s highly educated customers). Most consumers like to compare prices of services and products, but drip pricing makes this education exhausting, if not impossible. Drip pricing also hurts businesses that choose upfront, transparent pricing; we know this as a form of sticker shock. The act of withholding cost information hurts customers and honest businesses alike. And up until recently, regulations have not limited the practice.
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The Early Stage of Regulation
As of July 1, 2024, the “Honest Pricing Law” or “Hidden Fees Statute” (SB 478) is in effect in California. It is a transparency law that requires the full price of most goods and services to include all mandatory costs and be clearly communicated to the consumer. Following that, effective May 12, 2025, the Federal Trade Commission (who named drip pricing “Dark Patterns” in a 2021 report) enacted the Rule of Unfair or Deceptive Fees (16 C.F.R. Part 464) which “prohibits bait-and-switch pricing and other tactics used to obscure and misrepresent total prices and fees for live-event tickets and short-term lodging.” The FTC’s rule says that most fees must be clearly and conspicuously communicated before payments are made. This means that any mandatory fee (even one labeled ancillary) must be a part of the initial displayed price. Some fees may be excluded from the initial cost of the service or product: government charges, shipping, and optional ancillary fees. All other costs must be included in the original upfront price. Another part of the regulation is that fees must be accurate and truthful; a business can’t tack on a misrepresented or untrue fee (like an environmental fee when no sustainability work is completed).
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Reservation Platform in a Lawsuit
On April 4, 2025, a man in California filed a class action lawsuit against a parking reservation company. He claimed that the company practiced drip pricing by advertising a parking space for one price and dripping in a mandatory “processing” fee at the end of the transaction. The lawsuit says, “[this company’s] practice of adding fees at the end frustrated comparison shopping, impeded competition, and led consumers to pay more for their parking spots than they otherwise would.”
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Product and service marketers use a combination of artificially low upfront prices, small incremental fees, and late disclosure to manipulate customers, distract price comparison shopping, and coerce purchases. Also, drip pricing thwarts businesses and retailers who desire to communicate transparent pricing, as they initially appear more expensive than competitors. The Federal Trade Commission and the state of California are implementing regulations that will hopefully diminish these sales tactics. Consumers desire to make educated decisions with their purchases and have every right to know full prices up front. Consumers may need to work together to demand upfront, transparent pricing to increase the volume and reach of these and similar regulations.
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References: ​
https://www.ftc.gov/system/files/ftc_gov/pdf/P214800%20Dark%20Patterns%20Rep ort%209.14.2022%20-%20FINAL.pdf ​