Sunk Cost Psychology Reinforces Added Hidden Ticket Fees

A survey found that in the UK, 93% of event ticketers add “drip fees” on to transactions.  As you probably suspect, those are the undisclosed added fees that pop up as you go through the purchasing process.  They appear in more than just event ticket transactions. Though in the UK, event ticketers had added the fees at double the national average.

Drip pricing occurs when consumers are shown an initial price for a good/service (known as the base price) while additional fees are revealed (or “dripped”) later in the checkout process. These “dripped” fees can either be mandatory (e.g., booking fees) or optional (e.g., seat reservation on a flight). This practice means that consumers may be “baited” into choosing a product because of its (low) base price, yet possibly have to pay a much higher price to complete the purchase as consumers do not become aware of dripped fees until they have already started the checkout process.

As the article notes, one of the challenges to getting rid of the fees is that no one wants to be the first to provide the honest total price up front for fear of losing out to their competitors. If you see a flight for $99 and another for $250, the psychology of sunk cost will keep many people from abandoning a transaction in favor of the more honest airline after realizing the $99 ticket is $300 after fees because they have already spent a fair bit of time choosing seats, putting in address and credit card information.

Seeing that there is little benefit to being honest about the cost up front, many companies will resort to advertising a low price and then having add on fees for every choice you make.

Essentially what is required are rules to force people to reveal fees up front, or no one will do it. The danger is that unless the rules are particularly well-written, there are always opportunities label added fees in a way that slips through the cracks and then the whole practice starts over again.

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker (artshacker.com) website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/)

My most recent role was as Executive Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.

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