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I don’t get it. People are charged the fee anyways. Why would including them in the displayed price create higher prices?

Detrytus 2y ago
Because they will, out of the habit, mentally compare those prices to the prices they are used to see printed in the menu. Basically double-counting all the taxes and fees. They do not say it will create higher prices, it will create AN IMPRESSION of everything getting more expensive. It's all about perception, that will cause people to be more frugal.
reportgunner 2y ago
Because the restaurants will raise the fees that are baked in the prices.
cool_dude85 2y ago
I suppose the theory is, fewer people buying food when the menu lists the real price, revenue goes down, we must raise prices to keep revenue up.
mgkimsal 2y ago
When searching for online pricing, seeing 'menu' prices gives one impression. Hey, this burger is only $6?! Great value! So... you end up going there based on some mental impression of getting a $6 burger for... $6.
jawilson2 2y ago
There are a lot of people who respond like this. It reminds me of years ago when JCPenny stopped having "sales," and they just set prices to be permanently low. [1]. It cratered their business. It turns out people love having coupons and feeling "smart" about getting a good deal; coupons are sort of a way to gamify shopping, even if you actually end up paying more. In the case of fees, there are apparently many people who don't consider the fee part of the product, and are an external to what they are purchasing, or out of the control of the restaurant. For me, and probably many like us, the sticker shock comes at the checkout with the final price, and I have zero hesitation to cancel the order at that point. I refuse to use delivery apps, or even online ordering from many restaurants, for this reason. I hate the feeling of being psychologically manipulated into buying something because I'm already "committed" at the last step, where they can add fees. Concert and sporting event ticket hubs, like StubHub, are the same. I'll add 4 tickets to an event at a reasonable price, and the final checkout price is $200 higher, so I'll find something better to spend my money on instead. [1] https://www.forbes.com/sites/panosmourdoukoutas/2017/02/24/a-strategic-mistake-that-still-haunts-jc-penney/?sh=445ce8001bcf https://www.forbes.com/sites/panosmourdoukoutas/2017/02/24/a...
- pixl97 2y ago
  Wikipedia has a good page for getting started on the practice of https://en.wikipedia.org/wiki/Psychological_pricing https://en.wikipedia.org/wiki/Psychological_pricing
- daft_pink 2y ago
  But how does that… create higher prices?
- pseudalopex 2y ago
  > It reminds me of years ago when JCPenny stopped having "sales," and they just set prices to be permanently low. [1]. It cratered their business. It was not so simple according to people who worked and shopped there. Not all prices were lowered. Quality declined. They made many other changes at the same time. They bet on attracting young people to an uncool brand.
swatcoder 2y ago
They're warning about the reaction of customers who encounter higher prices on the items they're looking at. Even if we assume/pretend that the total for some specific order might not change, they're argument is that higher nominal prices on the menu will discourage customers from ordering as much in the first place and thereby depress the industry. But of course, even if so, that's by way of customers getting clearer insight so it's not the most convincing argument from the perspectives of ethics or even market efficiency.

Detrytus 2y ago

Because they will, out of the habit, mentally compare those prices to the prices they are used to see printed in the menu. Basically double-counting all the taxes and fees. They do not say it will create higher prices, it will create AN IMPRESSION of everything getting more expensive. It's all about perception, that will cause people to be more frugal.

reportgunner 2y ago

Because the restaurants will raise the fees that are baked in the prices.

cool_dude85 2y ago

I suppose the theory is, fewer people buying food when the menu lists the real price, revenue goes down, we must raise prices to keep revenue up.

mgkimsal 2y ago

When searching for online pricing, seeing 'menu' prices gives one impression. Hey, this burger is only $6?! Great value! So... you end up going there based on some mental impression of getting a $6 burger for... $6.

jawilson2 2y ago

There are a lot of people who respond like this. It reminds me of years ago when JCPenny stopped having "sales," and they just set prices to be permanently low. [1]. It cratered their business. It turns out people love having coupons and feeling "smart" about getting a good deal; coupons are sort of a way to gamify shopping, even if you actually end up paying more. In the case of fees, there are apparently many people who don't consider the fee part of the product, and are an external to what they are purchasing, or out of the control of the restaurant. For me, and probably many like us, the sticker shock comes at the checkout with the final price, and I have zero hesitation to cancel the order at that point. I refuse to use delivery apps, or even online ordering from many restaurants, for this reason. I hate the feeling of being psychologically manipulated into buying something because I'm already "committed" at the last step, where they can add fees. Concert and sporting event ticket hubs, like StubHub, are the same. I'll add 4 tickets to an event at a reasonable price, and the final checkout price is $200 higher, so I'll find something better to spend my money on instead. [1] https://www.forbes.com/sites/panosmourdoukoutas/2017/02/24/a-strategic-mistake-that-still-haunts-jc-penney/?sh=445ce8001bcf https://www.forbes.com/sites/panosmourdoukoutas/2017/02/24/a...

pixl97 2y ago
Wikipedia has a good page for getting started on the practice of https://en.wikipedia.org/wiki/Psychological_pricing https://en.wikipedia.org/wiki/Psychological_pricing
daft_pink 2y ago
But how does that… create higher prices?
pseudalopex 2y ago
> It reminds me of years ago when JCPenny stopped having "sales," and they just set prices to be permanently low. [1]. It cratered their business. It was not so simple according to people who worked and shopped there. Not all prices were lowered. Quality declined. They made many other changes at the same time. They bet on attracting young people to an uncool brand.

swatcoder 2y ago

They're warning about the reaction of customers who encounter higher prices on the items they're looking at. Even if we assume/pretend that the total for some specific order might not change, they're argument is that higher nominal prices on the menu will discourage customers from ordering as much in the first place and thereby depress the industry. But of course, even if so, that's by way of customers getting clearer insight so it's not the most convincing argument from the perspectives of ethics or even market efficiency.