The Netherlands Authority for Consumers & Markets (ACM) conducted an experiment to investigate the effect of incomplete prices when booking a holiday home. Websites that display incomplete prices cause greater uncertainty, make choosing more difficult, undermine trust and give the feeling of deception compared to websites displaying transparent prices.

Why this experiment was conducted: unclear picture of actual costs
In 2021, the ACM conducted a study into effective transparency. The aim was to determine the most effective means of providing consumers with complete and also clear information. It was known that certain websites displayed incomplete prices, listing additional costs, for example, behind an 'i' icon or on a different page, in a practice known as 'drip pricing'. As a result, consumers have an unclear picture of the total price of a holiday, for example, due to the incremental additions during the booking process. This prompted the ACM to investigate the effect of displaying transparent prices versus incomplete prices on comprehensibility and the choices made by consumers.

Type of intervention: full pricing information vs. incomplete pricing
In the study, two versions of a fictitious website were developed: one with full price disclosure and one in which additional costs were listed behind an 'i' icon. Additional costs were cleaning charges and reservation fees. Both versions of the website included links to navigate to different pages or sections or external content.

Method used: online experiment
An online experiment was conducted that involved asking 1,000 people to book a holiday on a limited budget. Participants were randomly allocated to one of the two versions of the website: full pricing information and hidden extra costs. Next, they filled in a questionnaire about their experience. Both websites were compared in terms of: clarity of pricing and the search process, trust in the holiday home provider, behaviour (intention to book) and satisfaction with the choice made. Participants allocated to the incomplete pricing version were also asked how visible the icon and underlying price were. The study was conducted in collaboration with the Motivaction research agency

Result obtained: full pricing information rated superior in every aspect
Less than half (45%) of the respondents said they had seen the 'i' icon with the additional costs. However, only 15% actually clicked this symbol. As a result, the additional costs were only visible later in the process. The website with incomplete pricing came across as less clear and less transparent to participants. They were also more likely to find the website version with incomplete pricing misleading, implausible and hence less reliable. Although participants who viewed the version of the website with incomplete pricing considered more expensive options, they did not go on to select more expensive options. They were more likely to be dissatisfied with their choice and less likely to book on a similar website than participants who were given full pricing information. The website version with full pricing information was rated superior in every aspect.

Impact: holiday home providers adjust their pricing information
This study showed that pricing transparency helps consumers make better choices. Incomplete pricing information hinders clarity and requires greater investment in the search process. In addition, transparency contributes to website reliability. These findings provided input for the ACM's enforcement strategy focused on holiday parks. Eight holiday home providers changed their pricing information after being contacted by the ACM. They now show complete pricing information, including mandatory additional costs.

Source: https://www.binnl.nl/home+-+en/knowledge/publications/bin+nl+publications/HandlerDownloadFiles.ashx?idnv=2719979