Rules & Regulations

Pricing and Charging

In this topic:

• Pricing and charging
• Pricing rules for serviced accommodation
• Pricing for food and drink
• Pricing for ticket sellers

Pricing and charging laws apply to everyone

Pricing laws apply to everyone. There are general regulations about pricing laid down in the Consumer Protection Act 1987 and then specific ones for accommodation providers and sellers of food and drink.

BERR (formerly the DTI) produce an excellent guide for pricing called the Code of Practice for Traders on Price Indicators, which clearly explains the various laws and gives examples of how to comply (and what is non-compliance). We strongly recommend you read and keep a copy. Some of the main areas are highlighted below and in the subsequent pages.

Pricing is mandatory

You must clearly display prices for everything you sell, either on the goods themselves, on labels on shelves or in catalogues and price lists. On websites you must display the prices so that they can be clearly understood, either next to the picture or description of what is being sold or in an easy to understand online price list. Pricing must include VAT and anything else that is compulsory as part of the purchase, such as service or delivery. You must also clearly price any variations, eg for size, colour, date of purchase etc.

The only exceptions, where you don't have to provide a price, are for goods supplied as part of a service (eg breakfast with bed and breakfast); the sale of goods through auctions; the sale of works of art (although it's still a good idea to price them); the sale of antiques (ditto) and jewellery, precious metals or watches costing more than £3,000 and on display in a shop window).

Fairness, clarity, honesty

There are lots of laws relating to how you display your prices and charges. We strongly recommend you read and keep a copy of the code. All of them have the following as their basis:

• Pricing should be clear and include everything that is not optional
• Prices should be clearly displayed
• There should be no nasty surprises for customers

Include everything

In other words, however you give or display your prices they must not be misleading. This means that, when selling to customers, they should include VAT, service and any other non-optional element that can be calculated. Where it can't be calculated (for example, where service is 10% of the total), how you calculate the final amount must be clearly displayed, equally prominently. If a price includes something (like breakfast in the room price) or a free train ride with an admission ticket, then you must state clearly what the price includes, and, for the sake of clarity, state clearly what is not included if it might be natural to make an erroneous assumption, eg, 'Price includes a free train ride for each child under 16, adults will be charged additionally'.

Clear pricing no matter where it's displayed

The Consumer Protection Act (1987) makes it a criminal offence to mislead customers about prices. It also makes it a criminal offence not to do everything possible to correct a price if it becomes misleading (because, for example your prices change) and there is a chance that customers may be relying on the old information. Both obligations are irrespective of whether your prices are displayed on price tags at your premises, in advertisements on the TV, radio or in the press, in brochures or flyers, on websites, via email, text, in a letter or given orally either in person or over the phone.

Distance selling

If you sell anything at a distance, meaning without the customer present, for example through your website or over the phone, then you must ensure that your customer is absolutely clear about the pricing and any additional costs like postage, packaging and any surcharge for payment methods. These are just the regulations applying to pricing, read our Online Selling and E-marketing Regulations topic for lots more information and regulations.

Keeping pricing up to date

If you produce written material, like a brochure or price list, then you should date it, eg 'September 07 - March 08 Price List', or '2008 Summer Catalogue' or 'Prices valid until December 2008' etc. If your prices are displayed your website then they must be the correct prices at whatever date the customer searches or searches for. So, for example, if a customer can search for availability for next summer, then the prices that show must be correct for that period. If you put a price for something in a press advertisement, the publication is generally taken to have a shelf-life (eg a week for a newspaper, a month for a monthly magazine, a year for an annual brochure). If your price expires sooner than this shelf life, you must take steps to advise customers when they enquire and before they commit to buy.

Making a pricing mistake

If you make a mistake, and accidently price something incorrectly, you are not obliged to sell it to a customer at that price, because the actual contract takes place at the time of the sale, whether that's at the till or when the customer actually books. But once the sale is made, you are obliged to honour it. And if you repeatedly 'make mistakes' then the Office of Fair Trading is likely to investigate you and take steps to ensure that you correct your procedures.

Offers, reductions and limited availability

There are quite strict guidelines about how you describe goods that are on offer, that include something for free, that are at a reduced price or are a different price compared to something else, like the recommended retail price. It is strongly recommended that you read the Code of Practice for Traders on Price Indicators. Basically you must be very clear about why something is an offer, eg, not '20% off' but '20% off compared to our usual price' or 'now £59, previously £79' (and your usual or previous price must be the price at which you've been selling this good or service for at least the last 28 days - except for perishables like food and flowers).

You also aren't allowed to put up signs that say, for example '50% sale' unless at least 10% of your total stock is offered at a 50% discount from your usual or previous price, at which they must have been displayed for at least 28 days.... There are lots of regulations and guidelines for this area, we have mentioned only a few, and we strongly recommend you keep a copy of the Code of Practice handy.

Different prices for different payment methods

There is nothing to stop you charging a different price for different payment methods, eg 2% extra for credit card payments as long as the additional cost is clearly displayed (or in the case of over the phone orders, verbally communicated) before the customer commits to buy.

Also in this topic:

• Pricing rules for serviced accommodation
• Pricing for food and drink
• Pricing for ticket sellers

More from the Toolkit

• Also see Online Selling and E-marketing Regulations