Rules for total and component pricing

A component price is a portion of the total cost a customer needs to pay for a product. You can’t promote the component price unless you also state the minimum total cost (single price) of the product.

Single price

The single price is the minimum total cost that can be calculated and includes taxes, duties, fees, or levies (such as GST).

The single price must be:

• clear at the time of the sale
• equally prominent as the most prominent component of the price.

A single price does not stop you or the customer from negotiating the price.

Example

A furniture catalogue advertises a lounge suite, which is on sale for '6 easy payments of $300'. The total price ($1,800) is in the fine print at the bottom of the advertisement, partly obscured by a photo of the lounge. The business must reprint the catalogue to clearly show the single price.

Car sales

The most common example of component pricing is in car sales. ‘On-road’ costs like transfer duty are usually part of the compulsory cost of the car. Any price listing for the car:

• must prominently state the minimum total cost of the car, including compulsory additional costs
• does not have to include the cost of optional extras (such as a sun roof or tinted windows).

Service contracts (e.g. mobile contracts)

Some businesses offer service contracts for periodic payments. The rules for these types of contracts are slightly different. The single price does not need to be as prominent as the component prices. However, they must still display a minimum total cost.

Example

A mobile phone provider offers a 12-month mobile phone plan. The plan includes calls and the handset for $49 a month. They still advertise the total minimum total cost ($588), but not as prominently as the $49. This service provider has complied with the law.

Restaurants and cafés

If you are a restaurant or café, you may include a surcharge on certain days. You can display this as a percentage rate on your menu. This is fine, as long as you display it prominently, clearly and transparently. You don’t need to produce separate menus for surcharge days.

Travel agents

The cost of travel fluctuates regularly. If you are a travel agent, you must therefore display:

• the single price for a holiday (based on the most accurate information available)
• clear advice that the price is subject to change
• an explanation of the factors that cause these changes.

You must tell the customer the minimum total cost they will need to pay. You should:

• give this as a single figure
• make sure this figure covers the complete cost of the basic package.

You may advertise holiday packages as being ‘from $1,200’. This is fine, as long as it includes all essential components of the price.

Example

A travel agent advertises a holiday package for Hawaii. It lists the price as $799 for 10 days. In smaller print, the ad explains that this excludes taxes ($150) and the travel agent’s fee ($200). They must reprint the ad and it must display the total minimum price of $1,149 at least as prominently as the $799 listing.

Real-life case study

For a period of 10 months, an airline did not display some airfares on its website inclusive of all taxes, duties, fees and other mandatory charges in a prominent way or as a single figure. A penalty of $200,000 was imposed by the federal court for contravening the single price provisions of the Australian Consumer Law.