This is an extract from the CAP website.

 

Reference pricing

In light of the recently published Guidance for Traders on Pricing Practices (replacing the 2010 BIS Pricing Practices Guide), now is a good opportunity to remind yourself of the rules and guidance you should take into account when referring to the prices of competitors’ products or those you have previously charged.

The Advertising Standards Authority (ASA) position on reference pricing has not changed as a result of the new Guidance. The Committee of Advertising Practice (CAP) Code reflects the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the ASA applies the CPRs when it considers whether an ad is likely to mislead. The Guidance offers practical advice on how to ensure pricing practices comply with the CPRs, and following it will make your ads more likely to stick to the Advertising Codes.

To help you along the way, here are five things to consider:

1# Make the basis of savings claims clear.

Include material information a consumer needs to understand a price comparison and make an informed decision. Remember, significant conditions are unlikely to be acceptable if hidden in the smallprint. CAP’s AOL on Smallprint and footnotes explores this issue in more detail.

2‘From’ and ‘Up to’

Don’t exaggerate the availability of a product at a given price. The ASA usually applies a rule of thumb that 10% of the products or services advertised should be available at the “from” price (for example, “tickets from £10”); similarly, 10% of products should attract the “up to” saving where such a saving is advertised (for example, “save up to £100 on hotel rooms”). Other considerations might also apply; for example, the availability of tickets at an advertised fare should be spread reasonably evenly across the travel period.

3

Prices used as a comparison should be genuine and not artificially inflated. When comparing against your own previous selling price, make sure the higher price has been charged within a reasonable time period. If the higher price is not your usual selling price, that could undermine a claim that consumers are making a saving.

4

Previous prices used as a basis for comparison should also generally be the most recent price, unless explicitly stated otherwise, and the period of time for which the new lower price will be available should not be so long as to make the comparison misleading.Avoid using a lower promotional price for longer than the product was on sale at the higher price.

5

Recommended Retail Prices (RRPs) should reflect the price at which the product or service is generally sold.  Advertising a price is not the same as selling at that price, and it is not enough to show that a quoted RRP was recommended by the manufacturer.  RRP comparisons should always be against the same product. If you are the only seller of the product, you should avoid using an RRP.

Visit CAP’s Prices: Overview AOL for links to more specific and in-depth guidance. Updated CAP guidance on pricing will be coming soon.

If you are unsure how your activities fit within the rules, please take advantage of our Advert Review service.

Contact us, and find out how we can help.

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