Your pricing strategy is a very important part of running a successful business. Learning how to establish your pricing strategy is one part of the equation.
However, you must also consider a few things before you get started that could get you in legal trouble.
When pricing your products and services be sure that you don’t violate one of the following principles outlined by the Australian Consumer Law.
Competitive Pricing
You must not mislead customers when you compare your current price to a former price.
Recommended Retailer Price
The Recommended Retail Price is a recommendation to the retailer and cannot be a price that the retailer is forced to charge.
Predatory Pricing
This type of pricing occurs when a business with a large customer base lowers their prices to an extent that they damage their smaller competitors.
Predatory pricing is anti-competitive and illegal.
Price Fixing
This practice is where two or more competitors agree to set their prices at a certain rate or to charge certain fees. When they do this they remove consumer choice and competition in the marketplace.
This practise is illegal in Australia.
Parallel Pricing
This is the practice of following the pricing strategies of other competitors almost exactly. This substantially reduces consumer choice and competition in the marketplace.
This practise is illegal in Australia.
Multiple Pricing
This is when something is advertised for multiple different prices. Consumer law states that a business must sell goods at the lower price or remove the item completely until the error is corrected. There are a few exemptions to this including:
- When it’s stated that prices vary by region
- When a price overlays or hides another price
- When a price is in overseas currency on the display or is a unit price
Unit Pricing Code
Retailers must ensure that they use a standard unit of measurements such as litres or meters when pricing their products for consumers.
This is so that customers can compare the price and value to other products which are similar.
It’s mandatory for retailers to display both the price per unit and the price for the entire product so that this comparison can be easily made.
Credit Card Surcharges
You must label any surcharges that you’ll charge for using credit cards to make purchases clearly on the product or services.
When a surcharge is labelled it must directly reflect the actual costs the business is charged.
Displaying Your Prices
You must display your prices clearly and accurately. In a way that doesn’t mislead customers.
This includes accurately displaying comparison prices and displaying total price including taxes and fees.