THE BLOG
02/01/2012 11:20 am ET

The Bait and Switch Deception of Price vs. Cost

Consumers deserve to know the full price of a product before they put it in the cart. There should be no legal footing to do anything less.

The airlines have their collective undergarments in a bundle over a recent Department of Transportation edict that makes them tell consumers the truth. A plane ticket's full price, including once hidden fees, must now be revealed to consumers up front. Talk about insanity! Marketers are already legally compelled to tell the truth about a product's assets and (especially within pharmaceuticals) its potential risks. Letting shoppers know how much a product or service will actually cost them removes the last gargantuan sales driving deception sellers have left.

From a playground "Why are we the only ones who have to play by the rules?" mentality, the airline industry's angst is almost understandable. There are millions of manufacturers, retailers and service providers in a plethora of industries burying up to 50% percent or more of their product/service costs from consumers and getting away with it each and every single cash paying, credit card swiping day.

Back in the olden days of "pay what the sign says" commerce, "price" was the amount you actually paid for an item. These days, thanks to clandestine fees, shipping and handling, taxes, service fees and the like, "price" is only a stepping stone to a bigger number. The cost of an item, how much money you need to actually buy it, is not the price of it in the vast majority of purchase instances.

Still, it's a bit dumbfounding that the DOT would first go after airlines' mud goggled transparencies, ignoring the stampeding herd of rental car industry elephants in the middle of the room. Certainly, by percentage, the financial slight of hand executed on every rental car contract is much more heinous than those of the air carriers. Sales and profit driven marketers, including those named "Hertz", certainly understand the cost of giving consumers bad news. However, there's a Grand Canyon sized difference between letting consumers down gently and intentional price propaganda built to garner more profits for the seller at the consumer's expense.

Recently, I rented a car at DFW Airport in Dallas, TX. from hotwire.com. An economy car was touted in big red letters for $39.95 per day. Yet, instead a grand total of $119.85 below the day rate, it said "$187.60 total" in small print, with an asterisk. My true rental charge -- $62.53 - was $22.58 more per day than the $39.95 hotwire quoted. If I didn't notice the tiny print under the original price, and if I hadn't pulled out the calculator to do the math, I would have had no idea I was being taken for one hell of a ride. Unfortunately, this was just the beginning.

The North Dallas Tollway, a favorite choice of business travelers, cannot be paid manually (i.e., you can't throw your change in a hopper at the toll booth when you exit). You must have a toll tag to use it, and rental cars are equipped with them. The rental counter guys and gals are more than happy to tell you that you are free to traverse the pay road, worry free, with your toll tag. What they don't tell you is how much this "convenience" is really going to gauge you.

Unlike I imagine just about anyone else, I sat in the passenger's seat to read the mouse-sized fine print on the toll tag attached to the far right of the windshield. If a driver used the toll tag, even once, he/she would be charged a $2.95 "convenience fee" for every day of the rental (up to a month), plus an inflated price for the actual toll ($3.00 per toll rather than the $1.33 fee for any other car going my way). If I had taken this brief one-time trip on the tollway, the rental car company would have charged $14.80 for the luxury. $13.47 in profit for the rental car company on a $1.33 fare. (I can only imagine what would happen in a New York City cab if this type of "courtesy math" was applied, but I digress.)

The marketing industry created and later perfected one of the most time honored of consumer deceptions, "Plus Shipping and Handling." It used to be advertisers would lead you to believe the Acme Knife cost $9.95 until you were on the telephone line. Then, the company would casually slip in the $15.00 shipping and handling fee, hoping you might not notice. Today, a host of websites won't even reveal additional charges until after you enter credit card and shipping information. The sellers are hoping that if you notice the additional cost, you'll a) feel that you're already too committed to back out of the transaction or b) accept the number as what it actually costs to deliver the product, without mark-up.

When you buy a gallon of gas, you know how much it will cost to the tenths of a penny. Why should any other product or service be different than that? In a warped way, it's almost easy to understand the airline's current state of unhappiness. With so many other industries profiting from price deception, the airlines must feel pretty cheated.