Price advertised is not the full price
Sometimes, businesses promote a ‘component price’ for a product. A component price is a portion of the total cost you need to pay for a product.
Businesses can’t do this unless they also state the minimum total cost (‘single price’) of the product.
Single price
The single price is the total of all measurable costs and includes:
- the total amount of taxes, duties, fees, or levies (such as GST)
- any additional charges.
The single price must be:
- clear at the time of the sale
- equally prominent as the most prominent component of the price.
The single price must include any known delivery charges. This includes when the business is only aware of the minimum delivery charge. For example, online retailers who always charge for postage must include this in the single price.
A single price does not stop you or the business 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.
Motor vehicles
The most common example of component pricing is in motor vehicle 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 vehicle, including compulsory additional costs
- does not have to include the cost of optional extras (such as a sun roof or tinted windows).
Service 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.
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 minimum total cost ($588), but not as prominently as the $49. The service provider has complied with the law.
Food and drink
Restaurants and cafes sometimes include a surcharge on Sundays or public holidays. They may display this as a percentage rate on their menu. This is fine as long as they display it prominently, clearly and transparently. They don’t need to produce separate menus for surcharge days.
Travel agents
The cost of travel fluctuates regularly. A travel agent 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.
Travel agents must tell you the minimum total cost you will need to pay. They should:
- give this as a single figure
- make sure this figure covers the complete cost of the basic package.
Travel agents 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 ten days. In smaller print, the ad explains that this excludes taxes ($150) and the travel agent’s fee ($200). They must reprint the ad to display the total minimum price of $1,149 at least as prominently as the $799 listing.