What Are Drip Fees and Why Should You Care?

Welcome to our new post-pandemic inflationary hidden-cost world where the economy and the bills we pay are not always what you expect them to be. Hidden tricky fees are popping up more and more and are lurking everywhere, whether you pay attention or not, and you should. There are many names for these fees. But they all fall under one group heading called “drip fees”. So what are these drip fees and why should you care?

Water dripping representing drip fees

We All Know Prices Are Going Up Right Now

For quite a while, months and months and even years, we have been seeing that what we buy is costing more and more every time we shop. Like everything else in life, once you experience something like inflation and rising prices—you read about it, hear about it, and pay for it—it becomes more real to you and almost what you expect to happen until it stops.

But, unfortunately, you don’t know when that is going to happen so you continue to pay and pay because in most cases, like food and gas, you have very little choice.

So when you head out to buy your favorite meal at a great restaurant for $24.99 or you shop online for those $50.00 bargain concert tickets you expect to pay those prices for them, but you may not. Do you carefully check the final cost of the bill? Is that $50.00 concert ticket actually $50.00?

Drip, Drip, Drip

It’s not a new tactic, it has reared its very ugly head before. But these days, it’s become a much more brazen thing and it hurts you and me regularly, especially when you aren’t paying attention. It’s drip pricing. Think of it like the dripping kitchen sink that you once had and how annoying it was to hear that sound on your nerves. This time the drip is on your wallet.

Drip pricing is a strategy that is used in certain industries that are very much price driven. It consists of revealing the whole price gradually, to draw people into the buying process and make their option seem cheaper than the competition. It is a strategy that is found to a wider degree with online purchasing, but not exclusively. It can even happen even when you order a pizza from your friendly neighborhood pizza guy.

Hear the Dripping Right Now?

The drip is becoming more prevalent among businesses as they grapple with higher overhead costs for goods and workers’ wages. Restaurants are adding drip fees they sometimes call “kitchen appreciation” fees. Airlines and companies such as Uber also began implementing fuel surcharge fees as oil prices have been skyrocketing. The names of these fees are endless and imaginative.

You may understand that inflation is stressing your wallet and you might even be sympathetic to business too, because it is happening and affecting them too in a bad way. But they are getting some help from you.

Even if you feel sorry for United Airlines, or Ticketmaster and its parent company Live Nation Entertainment, Inc., you still want them to be up front and honest with you, don’t you?

When I Mention “Price Gouging” I Get Lots of Pushback!

I have written about the rising cost of everything and one of the reasons for it has been that the businesses have been piling on top of their prices. They just simply can pump up the prices to whatever they feel they can get away with in a short supply market. Drip pricing is a part of that.

I have even had serious arguments with my own family members about it, even though President Joe Biden has stated he believes it to be true and is investigating these accusations. The investigations are moving slowly unfortunately! So the drip is just another way to get around the act of piling on to prices you pay.

Yes, inflation has made the costs of raw materials more expensive, but businesses are worried that if they raise their retail prices, that would upset consumers. Drip pricing is a more hidden way to raise prices.

It’s Eating Your Wallet and It’s Misleading

Price dripping is even more painful during inflation, but it’s not new. A few years ago, back in 2016, Ticketmaster and its parent company Live Nation Entertainment, Inc. allegedly used the deceptive practice of “drip pricing” that saw customers pay sometimes more than 65% above the advertised costs of tickets!

Findings were that Ticketmaster’s advertised prices deceived consumers by adding more mandatory costs, like service fees, facility charges or order processing fees, depending on the ticket, later on in the purchasing process. This so-called drip pricing allegedly caused consumers to pay much higher prices than advertised.

These mandatory fees inflated the advertised price by more than 20% and in some cases by over 65%.

It is misleading not to reveal the true cost of tickets after fans use the original price to decide which seats to buy. Consumers often don’t want to lose their tickets once they learn the truth, so that increases pressure on consumers to finish their purchase no matter about these extra drip fees.

While concert ticket prices are one thing, the same kinds of investigations have been done against car rental companies too. It is particularly painful when using an online service to make purchases, because it usually involves fine print and credit cards that just don’t seem to make contact with the brain in the same way that it does in an in-person transaction.

Why Do We Accept and Fall for This Practice?

Why do people fall for drip pricing? It’s pretty simple. What you see when you first look to make a purchase is the “lowest price or rate” on what you want and that is what psychologists call the “anchor price”. Any add on or “drip pricing” adjustments are just that and are seen in relation to that initial anchor price. Most people react by thinking it’s only a little bit more than what they’ve already internally committed to paying. But it is not. If you travel, look for something called a “resort fee”. That’s a fee on everything you’d expect to be included in the hotel’s rate, but now costs you extra!

Travelers drawn in with low anchor prices tend to develop an attachment to the fare or rate and go along with price increments without paying much attention to them.

If you stay at most hotels these days, you’ll see the drip, drip, drip when you get your final bill. Hotel reservations and vacation rentals are growing every day and during this inflation period, we are seeing runaway prices. And the fees just make it worse.

Related Posts
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Final Thoughts

The first thing to understand, especially these days, is that business may not always be your friend. They are motivated by profits and sometimes they even mislead and take advantage of you. Dripping prices is one way they do that.

Whether it’s called a convenience fee, a cleaning fee, a surcharge, or any other name, if it’s not presented up front to you when you want to buy something, it’s a drip fee and it hurts you.

Since it’s being created by “experts” and working quite well right now, it’s your job to look for it and then decide if it’s worth it. You may have alternatives or you may have to live without something right now until the inflation starts to decline and go away. We don’t know when that will happen, but it will. It always does.

How do you feel about drip pricing? Have you noticed it? Has it made you change your mind about your purchases, or will it? What are you looking for when you shop when it comes to honest pricing and drip fees?

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