Michael Luca

The Sinister Logic of Hidden Online Fees

Airbnb recently announced that it would start offering more upfront information about prices on the platform. Until now, Airbnb has used a pricing strategy that is informally known as “drip pricing,” in which a company lures in customers by showing a low price and then tacks on fees as they go along, in the hope that customers will focus their attention on the low initial price rather than the total. An Airbnb customer who tries to book a $300 room for a night can easily end up spending $600 after fees and taxes are tacked on.