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January 15, 2018

When it Comes to Price, Shoppers Like to be Fooled

Filed under: Internet,Retail — Edgar (aka MrConsumer) @ 6:17 am

Back in 2013, StubHub changed the way it priced tickets on its website moving to an all-in model that included all service charges and fees. Under this pricing method, the price you saw was the price you paid. How novel and how pro-consumer! No surprise charges or extra fees. But here’s the problem: when buyers used ticket comparison websites, StubHub’s prices seemed higher compared to the other sellers that posted artificially low prices without including all their added fees. As a result, StubHub’s sales went down dramatically.

So in 2015, StubHub reverted to its old way of pricing tickets — showing a lower price, and then tacking on hefty fees. Here, for example, is the price they advertised for seats on the “Green Monster” at Fenway Park for a particular game just after re-instituting the original, old system:

Green Monster 1

And when you clickthrough to order tickets, this is the surprise you get:

*MOUSE PRINT:

$600 tickets

$90 in fees!? Of course, to add insult to injury, Green Monster M2 seats can have a face value of just $110 to $165.

Within days of advertising low-ball prices again, StubHub was able to significantly increase their market share, according to the Wall Street Journal. [Story not free]

Now fast forward to today, and see what StubHub is doing now. After you choose your tickets (in this example two $125 tickets) and BEFORE they disclose what the fees are and what the real total price of your order is, the system forces you to enter your credit card number and name and address.

*MOUSE PRINT:

Stub Hub 2018

Maybe this is a technique to make you feel more committed to buying tickets even if you experience price shock when the final cost is eventually displayed to you.

We shouldn’t have to put up with practices like this, but we do. And judging by their increased sales when they advertised a price before fees were added, we tolerate that practice too.

We seemingly like being tricked into thinking we are paying a lower price or getting a great deal even when we are not. The poster child for this somewhat irrational behavior was J.C. Penney, when its new president, Ron Johnson, a few years ago did away with their phony 50% off sales and discounts. Sales plummeted. And then Ron Johnson lost his job. New management reverted back to advertising big discounts from inflated regular prices, and guess what happened? Sales starting jumping back.

What does this say about us as shoppers?

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12 Comments

  1. Like the airlines…. Your $200 flight ends up being $600 after all the fees. And this reminds and an airline I actually liked that ended up showing the final, total cost from the get go but reverted back to the low prices and added fees on checkout.

    Comment by Scott — January 15, 2018 @ 8:54 am
  2. We love to feel like we are getting a deal. The problem is that companies can change the price of the item higher fooling you on the discount.

    Comment by Richard — January 15, 2018 @ 10:08 am
  3. I don’t think we like being fooled. I think we like finding the lowest price, which is near impossible with everyone hiding their fees. StubHub paid the price for trying to buck “standard” misleading practices on their own, but if everyone was held accountable, then we could all shop fairly.

    Comment by Shawn — January 15, 2018 @ 10:09 am
  4. >What does this say about us as shoppers?

    Well, I’d say “what does it say about shoppers”, not “us”. I suspect Mouse Print readers are move savvy shoppers and would rather not put up with this stuff.

    Unfortunately, the general public have shown themselves to be idiots… frequently doing things against their best interests for short term gains, or based on obviously false statements.

    Comment by Robert — January 15, 2018 @ 11:31 am
  5. I liked STUB HUB disclosing the price+fee price. I want to know the full price. The darn ‘processing fee,’ ‘handling fee,’ ‘online/internet fee’ ‘mailing fee’ are all ridiculous. Soon they’ll have the ‘buying in person at the box office’ fee.

    Comment by Gerry Pong — January 15, 2018 @ 12:42 pm
  6. The devil is ALWAYS in the details, and fees are never disclosed in large print, upfront, and clearly. I don’t know about other shoppers, but the first thing I look at when I see “free” is exactly how much that free is going to cost me.

    Comment by Merry Marjie — January 15, 2018 @ 1:36 pm
  7. I hate all these hidden fees. It’s infuriating to see all these add-ons. I’ve yet to understand why you pay more to use an electronic system where you don’t even get a paper ticket! It’s on your phone or in your email. I doubt a human had to do ANYTHING vs going to a box office and interacting with someone who at least makes minimum wage.

    I was hopeful when JC Penny announced the real pricing strategy, however their ‘real’ prices were always higher than what you COULD get on the old system with little effort, either a coupon or a sale discount. A $25 ‘real price’ shirt was $40-$45 on the ‘old price’ system but could have been purchased for $15 or less with a 40%-60% discount and maybe a $5 off $15 or $10 off $25 coupon they always sent in the mail. Had they priced goods closer to the previous ‘with discount/coupon’ prices, or least competitively with other stores similar item prices after discounts/coupons, they could have made it work.

    Comment by jt4703 — January 15, 2018 @ 7:27 pm
  8. I was hopeful when JC Penny changed their pricing structure, but shoppers are a force to be reckoned with, and JCP ultimately backed down.

    I still shop at JCP because it is among my favorite clothing stores, but I’m not happy when I see clothing that is ALWAYS 30-40% off. If an item is ALWAYS 30% off, then the advertised ‘real’ price is not true! It’s aggravating to see shoppers prefer deceptive prices over straightforward prices.

    Thanks for another good article. Stubhub tried.

    Comment by Wayne — January 17, 2018 @ 7:26 am
  9. Well, “$9.99” instead of “$10.00” is as old as retailing and shoppers keep swallowing it.

    Comment by Blaze — January 17, 2018 @ 4:31 pm
  10. I tend to use TickPick because of their upfront pricing. (It’s been a while. So, I don’t know if they have succumbed to fee hiding.) It was a pleasant and refreshing experience.

    And, as jt4703 noted, the problem with J.C. Penney was that their everyday low prices were not close to the previous sale prices. I guess the economics weren’t there to price everything competitively all of the time. If it were, the change would have been a big hit.

    Comment by Marc K — January 21, 2018 @ 8:58 am
  11. To Gerry Pong: Actually some locations DO charge you those fees even when actually paying for the tickets at the box office. From what I recall, it’s because of the contract they have with the ticket brokers.

    To Merry Marjie: I’m with you on that practice. I always look for the asterisk as well.

    Comment by Stephen — January 29, 2018 @ 8:24 am
  12. This is what happens when consumers use software to do their shopping for them, to compete you must play the software’s game. The fault really lies with the software and its not including all costs when making a comparison,in my opinion rendering it useless as poorly written programming. Presumably this credit card information is saved on the site providing marketing leverage and opening you up to their security good or bad. I NEVER give the CCard info until I have a price, that’s just dumb, no price no business.

    Comment by Robert — January 29, 2018 @ 11:30 am

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