- Drip pricing happens when a business advertises a price that a customer cannot actually pay, because additional mandatory charges are added later in the buying process.
- The clearest example is sales tax: showing a price before HST and adding the tax at checkout is standard practice and generally not treated as drip pricing, because tax is externally…
You have probably experienced drip pricing as a consumer: the advertised price looks great, but by checkout it has grown thanks to a "service fee," a "convenience fee," or a mandatory charge that was never mentioned upfront. What many Ontario business owners do not realize is that this practice is specifically addressed by federal law — and getting it wrong is not just a customer-relations problem.
Drip pricing rules exist because Canada's Competition Act treats an advertised price that omits unavoidable charges as a form of misleading advertising, even if every individual fee is disclosed somewhere before the final sale. If your business advertises prices — online, in a quote, in a storefront, or in a proposal — this affects you.
What Counts as Drip Pricing
Drip pricing happens when a business advertises a price that a customer cannot actually pay, because additional mandatory charges are added later in the buying process. The problem is not charging fees — it is leading with a price the customer was never going to be able to get.
A few features tend to make a charge count as part of the "real" price rather than a legitimate add-on:
- It applies to virtually every customer, not just those who choose an optional feature.
- The customer cannot decline it and still complete the purchase.
- It is not a government-imposed tax that is genuinely calculated at checkout.
Fees That Are Usually Fine to Add Later
Not every additional line item is a compliance problem. The clearest example is sales tax: showing a price before HST and adding the tax at checkout is standard practice and generally not treated as drip pricing, because tax is externally imposed and calculated transparently, not a business's own hidden margin.
Genuinely optional add-ons — a customer actively choosing rush shipping, gift wrapping, or an upgrade — are also different in kind from a fee everyone pays regardless of choice.
Common Drip Pricing Traps
| Practice | Why it's risky |
|---|---|
| "Processing fee" or "service fee" added to every order at checkout | Not optional, not tax — likely part of the real price |
| Mandatory "resort fee" or "facility fee" not shown in the headline rate | Customer cannot avoid it by choosing differently |
| Quoting a base price for a service that always requires a mandatory add-on to be usable | The advertised price was never actually purchasable |
| Advertising per-unit pricing that omits a mandatory minimum order fee | Real cost to the customer is higher than advertised |
Auditing Your Own Pricing
- [ ] List every fee a typical customer actually pays from your advertised price through to final checkout.
- [ ] For each fee, ask: can this customer decline it and still buy the product or service?
- [ ] If the answer is no, that fee should generally be reflected in (or immediately adjacent to) your headline price, not revealed only at the end.
- [ ] Separate government-imposed taxes clearly from your own business fees.
- [ ] Review quotes, invoices, and online checkout flows together — a compliant homepage price does not help if your checkout flow adds mandatory charges silently.
- [ ] Revisit this audit whenever pricing, fee structures, or your checkout platform changes.
Why This Matters More Than It Might Seem
Drip pricing complaints tend to generate customer frustration precisely because the buyer feels tricked at the moment they are least able to walk away — often deep into a checkout flow or a signed quote. That frustration is exactly what draws regulatory attention, and it can also translate into public complaints, chargebacks, and reputational damage well before any formal enforcement step is taken.
For service-based businesses in particular — where pricing is often quoted individually rather than posted on a shelf — the same principle applies to written quotes and proposals: a "starting at" figure that virtually no real customer ever actually pays raises the same concerns as an online drip-pricing checkout flow.
Frequently asked questions
Is it illegal to charge any fees beyond my advertised price?
No. The issue is specifically about mandatory charges that are hidden from the advertised price and that most or all customers cannot avoid. Genuinely optional upgrades, and taxes calculated transparently at checkout, are treated differently.
What about shipping costs?
It depends on whether shipping is genuinely optional (for example, a free in-store pickup alternative exists) or effectively mandatory for the customer to receive the product. If nearly every customer ends up paying a shipping charge that was not reflected anywhere near the advertised price, that pattern is worth reviewing carefully.
Does this apply to B2B pricing and quotes, or just consumer advertising?
The general misleading-advertising principles under the Competition Act are not limited to consumer transactions, though enforcement focus has historically centred on consumer-facing pricing. A business quoting other businesses should still avoid advertising a "from" price that is not realistically attainable.
How should I fix a pricing structure I'm worried about?
Start by mapping every mandatory fee against your advertised price, then decide whether to build the fee into the headline price or restructure it as a genuinely optional add-on. A lawyer can help you review your specific pricing model and checkout flow before you make changes.
This is a corporate question
Start a file online — flat, published fees, reviewed by a licensed Ontario lawyer before a dollar is owed.