When purchasing a product, consumers first check the price displayed. But can they accurately assess the value of a product based solely on that number? Differences in size complicate simple price comparisons, and various fees or additional costs can alter the final amount paid. There is often a significant gap between the price listed and the actual expenses incurred by consumers, as well as the value they receive for their money. This exploration of the 'hidden secrets of pricing' examines the structure of prices encountered in daily life and highlights the often-overlooked differences between costs and value.
"How much more are consumers actually spending during the purchasing and usage process?"
While selecting breakfast items on a delivery app, a consumer discovered a price discrepancy between takeout and delivery options. Although the menu was the same, ordering for delivery cost an additional 900 won, not including any separate delivery fees. This discrepancy illustrates the difference between the initial menu price and the actual expenditure.
Additional costs that consumers must bear beyond the base price are hidden throughout the purchasing process. This article focuses on 'additional costs' that are often difficult for consumers to identify in advance.
Delivery fees add to food costs; price differences in stores and apps
In a survey conducted by Gyeonggi Province from October to November 2023, menu prices at 1,080 dining establishments were examined, revealing that 426 (39.4%) had different prices on delivery apps compared to in-store prices. Of the 5,364 menu items surveyed, 1,426 (26.6%) were found to be more expensive on delivery apps, with price differences ranging from a minimum of 70 won to a maximum of 8,000 won.At the time, Gyeonggi Province explained that the price differences between delivery apps and in-store sales are based on the business owner's management decisions and cannot be deemed illegal solely on that basis.
Legally, the Advertising Law may be applicable, but as seen in Gyeonggi Province's case, the mere absence of a separate indication of price differences does not automatically constitute a legal violation. It is essential to consider what price information was presented, how consumers might be misled, and whether the applicable legal provisions and requirements are met.
It is not easy to conclude that price differences between in-store and delivery app sales are illegal. However, how these price differences are communicated to consumers is a separate issue. It is necessary to examine whether consumers can easily verify price differences before ordering and whether the method of price display hinders rational consumer choices.
Additionally, depending on the delivery app used, the amount consumers pay for the same menu item can vary. For instance, when comparing chicken prices, one platform listed it at 26,000 won, while Baedal Minjok showed it at 27,000 won, indicating that the price on Baedal Minjok was 1,000 won higher than on other apps.
The reason for differing menu prices across delivery apps appears to be that individual franchisees can set their own selling prices. Even if a chicken franchise provides a recommended retail price, the actual selling price at individual outlets may differ.
Olo launches app to maintain in-store prices amid delivery fee issues
Issues related to additional costs are not limited to the delivery industry. In the wedding services sector, there have been ongoing concerns that consumers find it challenging to fully understand the prices of selected items or additional costs during the contract process for studio photography, dress rentals, and makeup services. The lack of clarity regarding penalties for contract cancellations and refund criteria is also a noted issue.On October 16, the Fair Trade Commission announced that it had issued advance notices of fines to 17 wedding venues and wedding planning companies nationwide for failing to properly display important information such as prices, penalties, and refund criteria. This action followed the end of a grace period for related display obligations in May.
The same issues are emerging internationally. In the United States, a new ordering service has been introduced to maintain in-store prices in response to the common practice of raising menu prices on delivery platforms. Olo, a restaurant ordering solutions company, launched a consumer-facing ordering app on October 20. This app's distinguishing feature is that it keeps menu prices the same as in-store prices at participating restaurants, differentiating itself from existing delivery platforms that reflect intermediary fees in menu prices.
However, maintaining menu prices at the same level as in-store does not eliminate all delivery-related costs. Olo's initiative can be seen as an attempt to change the pricing structure so that consumers can distinguish between menu prices and separate usage costs.
Differentiating prices for products or services is not inherently problematic. Delivery fees and contractual conditions can vary for businesses, leading to different prices. The crucial factor is whether consumers can adequately verify the total amount they will pay and the conditions before making a purchase. If the amount listed on the price tag does not represent the total expenditure, providing information that allows consumers to make rational comparisons and choices should also be considered part of price competition.
* This article has been translated by AI.
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