Pricing |
Multiple pricing
If a business has displayed more than one price for a product (for example, the price on the shelf is different to the price listed in a catalogue), it must sell the product for the lowest displayed price or withdraw it from sale until the price is corrected.
Component pricing
A 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 you must pay. The single price must be:
- clear at the time of the sale
- as prominent as the most prominent component of the price.
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 the business is aware of a minimum charge that must be paid (for example, an online retailer who always charges for postage).
A single price does not prevent you or the business from 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.
Examples of component pricing
Component pricing rules can have a significant impact on the sale of some goods and services.
Motor vehicle sales
The most common example of component pricing in action is motor vehicle sales.
When you buy a car, there are often extra ´on-road´ costs on top of the cost of the car itself, such as stamp duty. These costs are not optional extras - if you buy the car, you have to pay them.
Any advertisement for the car must state the minimum cost - the ´drive away´ price - which includes all non-optional extra charges.
The price displayed does not have to include optional extras, such as a sun roof or tinted windows, because you can choose whether or not you 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 a mobile phone provider is advertising a mobile phone plan, which includes calls and the handset for $49 a month, they 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, a travel agent needs to display the single price for the holiday, based on information available at the time. The business must also clearly advise you that the price is subject to change and explain what the varying factors are.
When advertising travel packages, businesses must provide the single price that reflects the minimum total cost you are required to pay. This is generally the basic package.
Travel agents are allowed to advertise holiday packages as ´From $1200´ as long as the price listed includes all non-optional components that you are 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 a restaurant charges weekend or public holiday surcharges, they must display prices that include the surcharge. They cannot rely on noting a percentage charge on the menu or bill.
For example:
A restaurant imposes a 15 per cent surcharge on all food and beverages on public holidays.
If the restaurant simply has a menu that states ´15% surcharge on Public Holiday´ in the footer, it would not be complying with the law.
There are simple ways for restaurants to comply with this legal requirement. Some may use a blackboard menu, and simply change the prices on surcharge days. Other restaurants use different or temporary menus on holidays.
Last reviewed 11/04/2013 |
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