Sometimes it can be difficult to work out the total price for goods and services, especially if you have to pay separately for all the bits and pieces that make up your purchase.
The law allows businesses to price each part of a good or service separately when they advertise—this is called component pricing. You may have noticed component pricing in promotions for electrical goods, computers, new cars or overseas holidays.
Although businesses are still free to advertise using component pricing, they must now also include a total or single price. The total price must be just as prominent in the advertisement as the price of components.
This means that you should be able to identify the total price in the advertisement just as easily as the prices for the components.
What is not included in the total advertised price?
Businesses do not need to include the following items in the total advertised price:
Delivery charges—although the minimum delivery charge should be included separately in the advertisement.
Optional charges or extras—such as the price of a more expensive model or add-on accessories.
Advertisements for goods and services that involve payment over the term of a contract via periodic payments (such as mobile phone or pay television contracts) must also state a total price but this does not need to be as prominent as the price for components.
The total price you have to pay for a good or service may vary according to your personal circumstances or preferences. However, if a business chooses to advertise the price of a good or service, you should be able to easily determine the minimum total price for that good or service. This should make it easier for you to compare the advertised prices of competing businesses and get the best deal.
Read over the examples below to get a better idea of what to expect when businesses advertise products and services.
Buying a new car
If you are looking for a new car, you can expect that a total price will include all charges associated with buying a base model vehicle with standard accessories. In this case the total advertised price must be just as easy to identify as the price of the components.
You should expect to pay a higher price than the advertised price if you choose a model that has more accessories than the base model, such as mag wheels, a roof rack or other enhanced features.
Shopping for a new mobile phone plan
When you shop for a new mobile phone you will notice that handsets, included calls, text messages and data usage limits are often bundled together. Telecommunications providers often give you the choice of a variety of different packages. In these instances, the provider can advertise the offer from a certain starting price (e.g. packages start from $150).
You can expect to pay more for a plan with higher quality handsets, greater data download limits or higher included calls.
Be aware that, as this is an example of a contract with periodic payments, the total advertised price does not need to be as prominently displayed as the price listed for the components.
Visit our 'Component pricing' page for information on business obligations under the revised law.
