Pricing |
Multiple pricing
If your business displays more than one price for a product (for example, the price on the shelf is different to the price listed in a catalogue), you must sell the product for the lowest displayed price or withdraw it from sale until the price is corrected.
Component pricing
Your business must not promote or state a price that is only part of the cost, unless also prominently advertising the single (total) price.
The single price is the total minimum cost that a consumer must pay. The single price must be:
- clear at the time of the sale
- as prominent as the most prominent component of the price.
To ensure you are displaying the price prominently, you should consider the medium you use as well as size of text, font, placement and colour of the text the single price appears in.
The single price is the total of all measurable costs and includes:
- any charge payable
- the amount of any tax, duty, fee, levy or charges (for example, GST).
The single price does have to include delivery charges when you are aware of a minimum charge that the consumer must pay (for example, you are an online business and post all of your products).
Advertising a single price does not prevent you or the consumer negotiating on price.
A single price for services supplied under a contract that allows periodic payments does not have to be displayed as prominently as the component prices. This is also the case for business to business transactions.
Examples of component pricing
Component pricing rules can have a significant impact on some industries.
Motor vehicle sales
The most common example of component pricing in action is motor vehicle sales.
Any advertisement for the car must state the minimum cost - the ´drive away´ price - which includes all non-optional extra charges such as stamp duty.
The price displayed does not have to include optional extras, such as a sun roof or tinted windows, because the consumer can choose whether or not they want these extras.
Retail
In situations where a product is advertised on a payment plan, the full price must still be shown, as prominently as the part-prices.
For example:
A catalogue advertisement for a lounge suite states the cost as "six easy payments of $300". The total price of $1800 is displayed, but it is in fine print at the bottom of the advertisement and is obscured by the picture of the lounge. The single price of $1800 is not as prominent as the $300 and is therefore unlikely to comply with the law.
Service contracts with ongoing periodic costs, and any goods provided as part of those service contracts, are excluded.
For example:
If your business is advertising a mobile phone plan, which includes calls and the handset for $49 a month, you would still have to advertise the total minimum cost over the entire length of the contract, but there is no requirement for it to be as prominent as the $49.
Travel
As the cost of travel quite often fluctuates, you need to display the single price for the holiday based on information available at the time. You must also clearly advise consumers that the price is subject to change and explain what the varying factors are.
When advertising travel packages, you need to provide the single price that reflects the minimum total costs a consumer is required to pay. This is generally the basic package.
You are allowed to advertise holiday packages as ´From $1200´ as long as the price listed includes all non-optional components that the consumer is required to pay.
For example:
A 10-day holiday package to Hawaii is advertised as $799. In smaller print, the ad explains that this excludes taxes ($150) and the travel agent´s fee ($200). The total minimum price is therefore $1149, and this price needs to be displayed as prominently as the $799 for the ad to be legal.
Food and beverage
If your establishment charges weekend or public holiday surcharges, you cannot rely on noting a percentage charge on your menu.
For example:
Your restaurant imposes a 15 per cent surcharge on all food and beverages on public holidays.
If the your menu simply states ´15% surcharge on Public Holiday´ in the footer, it would not be complying with the law.
To ensure you are complying, you could:
- have a set of menus for days on which you apply a surcharge, where all the prices listed are inclusive of the surcharge
- put an extra price column on your current menu, showing the prices inclusive of surcharges (the surcharge inclusive column must be as prominent as the normal price column)
- consider a pricing structure that avoid surcharges.
Last reviewed 28/11/2011 |
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