The Price You See Is Already a Choice
This series examines how consumers react when a seller reveals a product’s price in stages rather than as one comparable total. Its opening focus is drip pricing: the practice of displaying a base price first and disclosing mandatory or optional charges later, often after the shopper has selected an option. The practical judgment is straightforward but consequential: when comparing offers, readers need to know not only how much a product eventually costs, but what price was available at the moment they first chose.
A low opening number can reverse the comparison
Consider a simple choice between two round-trip airline tickets. One ticket is advertised at $194. The other costs $239, but that higher base fare includes baggage and seat selection. The cheaper-looking ticket charges separately for those add-ons. If a traveler chooses a carry-on and a reserved seat for both legs, the first ticket acquires $92 in additional charges and becomes $286—more expensive than the ticket that initially looked costlier.
The arithmetic is easy when it is placed in front of us. The decision is harder when the numbers arrive at different times. At the first screen, the shopper is not comparing $286 with $239. They are comparing $194 with $239, perhaps alongside a small note that additional charges may apply. The later total is accurate, but it is not the same information in the same decision position. By the time the extra charges appear, the shopper has already selected an airline, invested attention in a sequence of screens, and begun imagining the purchase as theirs.
That is the central subject of the research by Shelle Santana, Steven K. Dallas, and Vicki G. Morwitz: consumer choice, switching, and satisfaction under sequential price disclosure. Their experiments do not ask whether optional services should exist. They ask what changes when the prices of those services are shown before the initial choice or revealed only after it. In the non-drip condition, the add-on prices appear with the base prices. In the drip condition, the consumer first chooses between the base offers and encounters the add-ons afterward.
This distinction matters because a base price is not merely a number. It is also a signal about which option deserves attention. A low first price can bring an offer into the shopper’s consideration set, shape the reference point against which later charges are judged, and make the alternative feel expensive before the alternatives have been compared on equal terms. None of this requires the fee to be invisible. A charge can be plainly disclosed at a later step and still arrive too late to support the first comparison.
The same structure appears beyond air travel. A hotel may advertise a room rate, then add charges for internet access, parking, a pool or health club, or other services. An event ticket may be followed by processing and delivery charges. A rental car may display a low daily rate before insurance, fuel, or other selected extras are considered. These examples are not identical, and the evidence for one cannot automatically be treated as evidence for all of them. They do share a question: what does the customer know, and what must the customer reconstruct, when choosing among competing offers?
The first answer is not that every low headline price is harmful. If the lower-priced option remains cheaper after the services a customer wants are included, choosing it may be sensible. The problem is the mismatch between the price used to attract the initial choice and the price that should govern comparison once likely charges are included.
Three distinctions prevent a muddled debate
The first distinction is between drip pricing and partitioned pricing. Drip pricing is sequential: part of the price is advertised first, and additional charges are revealed as the customer proceeds. Partitioned pricing divides a price into components without necessarily showing the total. The components may appear together—for example, a room rate beside a resort fee—or at different stages. A transaction can therefore involve both practices: an online travel site may omit a resort fee from its first comparison listing, which is drip pricing, and later show the room rate and fee as separate lines without making the combined total prominent, which is partitioned pricing.
The second distinction is between an optional add-on and a mandatory fee. The airline research focuses mainly on optional services that participants can choose, such as baggage or a reserved seat. The Federal Trade Commission’s economic analysis focuses on mandatory hotel resort fees charged per room and per night. A mandatory resort fee may cover services such as internet access, parking, or health-club use, but the guest cannot decline the fee while keeping the room. The two settings illuminate the same information problem while answering different empirical and policy questions.
The third distinction is between bundling and disclosure. A hotel can bundle several services with a room. It can also price some services separately so customers pay only for what they want. Those are choices about what is included in the product. Separately, the hotel must decide how to present the price of whatever package it is selling. Showing a resort fee apart from the room rate does not create the bundling benefit; it changes how the bundle is displayed.
This matters because a defense of bundled services does not by itself defend a delayed or hard-to-compare price. Bundling can make economic sense. Different customers value internet access, parking, breakfast, or pool access differently, and a package may be offered for less than the sum of the individual prices. But the same bundle could be included in the advertised room rate, with a later breakdown explaining its components. A customer can learn what the price buys without having to discover the total by adding the pieces.
The FTC report illustrates the practical difference through hotel and online travel-agent pages. A comparison listing may show room rates without a resort-fee disclosure. A later hotel-specific page may mention the fee in smaller, less prominent text. The booking page may finally combine the room charge, taxes, and resort fee into a trip total. Each page can contain truthful fragments, yet the sequence makes it more expensive—in clicks, time, and attention—to compare one hotel with another. The report’s conclusion is economic rather than legal: separating a mandatory resort fee from the posted room rate, without presenting the total first, is likely to increase consumers’ search and cognitive costs.
This is why the phrase “the fee was disclosed” is too blunt to settle the issue. Disclosure has at least three dimensions: whether the charge is present, when it becomes available, and whether it is presented in a form that can be compared with competing totals. The focal experiments hold the first dimension relatively constant—the fees are ultimately shown—and vary the second. The hotel analysis attends to all three, including the prominence and location of the fee.
A useful way to keep the distinctions straight is to ask three separate questions. What is the product or package? Which services are mandatory and which are optional? And what number could a customer actually compare before choosing? Confusing these questions turns a debate about information timing into a debate about whether businesses may charge for services at all.
The puzzle waiting at checkout
A seller can reasonably argue that the consumer is not forced to complete a purchase at the first screen. The additional charges appear before payment. A total is shown. A shopper may abandon the transaction or start over. On this account, the initial base price should be harmless because the final decision can be made with complete information.
The research raises a more precise question: does complete information arriving later function as well as complete information at the beginning? The answer cannot be assumed from the interface alone. A consumer who starts over must revisit an earlier choice, remember or rediscover the alternative’s price, select add-ons again, and decide whether the possible saving justifies the effort. Even a clearly displayed total may therefore arrive after the decision has acquired momentum.
Across six studies, Santana, Dallas, and Morwitz compare drip and non-drip presentations in airline and hotel scenarios. Participants make an initial choice, select add-ons, see the resulting total, and—except where a later study isolates a different process—receive an opportunity to restart. The researchers then examine not only the first selection but also the ultimate selection, whether the final option is more expensive given the add-ons chosen, and how satisfied participants are with the outcome. The design makes the checkout defense testable rather than rhetorical.
The results and the mechanisms behind them belong to the chapters ahead. They will show why a later total may fail to reset the comparison, how perceived search costs can make restarting seem unattractive, and how people can defend a choice they made themselves. They will also connect the individual decision to the hotel and online-travel-agent market, where a firm that displays an all-in price may look expensive beside a competitor displaying only a base rate.
The scope matters as much as the puzzle. The experiments primarily study optional surcharges paid during the same purchase process, two alternatives, limited product information, and participants who are relatively inexperienced with the relevant choice. The fees are dripped, but they are not generally hidden in tiny print or buried in unrelated material. The FTC report examines mandatory resort fees and reviews related economic and consumer-behavior research; it is not a legal ruling. These boundaries do not make the evidence unimportant. They tell us what kind of claim it can support.
The practical issue, then, is not whether a business may offer a bundle or an optional feature. It is whether the first number shown gives the shopper a fair basis for comparing the choices that are actually available. Once that question is separated from the question of what is being sold, the rest of the problem becomes clearer. The next step is to follow the price through the purchase sequence and see exactly what changes when the total is delayed.