Legal aspects of pricing, promotions and competitions
Although you are generally free in terms of setting a price for your products, there are certain rules which you must follow when it comes to communicating these prices to customers. If you’re running a promotion or competition there are additional considerations which must be taken into account.
It’s important to display prices clearly and, for consumers, inclusive of VAT. Prices should be unambiguous, easily identifiable and clearly legible - so there shouldn’t be any room for doubt about which price relates to which product. In the case that goods are being sold by measure, unit prices must be shown in metric figures and pounds sterling.
If there are any non-optional extras which are required to be purchased with the primary goods, you should either include these as part of the total price, or display these prices prominently along with an explanatory statement.
If you’re comparing your prices to those of competitors, you need to make sure the prices you quote are accurate and up-to-date. It’s often a good idea to provide a date for the price comparison, especially in cases where pricing is likely to change quickly.
When it comes to payment, under the Consumer Rights (Payment Surcharges) Regulations 2012, you cannot charge fees to consumers for using payment methods such as credit and debit cards beyond the actual cost of processing that particular form of payment.
If you’re reducing the prices of certain products as a sales promotion, you should clearly explain the promotion and ensure that you’re not misleading consumers in any way by making exaggerated claims. Goods which are being sold at reduced prices should contain labelling which refers to the previous price, the period during which the higher price applied and the stores where it was sold at this price.
If you’re offering any “free” products as part of a promotion, you must clearly state how to claim the free products, together with relevant closing dates.
Any competitions which you decide to run as a form of marketing should either be free to enter or require an element of skill. If you levy any charge for participants in a competition based on luck this can be considered to be a form of lottery for which a licence is required. Running a lottery without a licence can lead to severe fines or even criminal conviction.
A variety of sets of Ts and Cs for sales of goods and services can be downloaded from our Business Documents Folder. These can help you clarify many issues such as pricing and payment. There is also a template for use for a prize draw promotion. Click on a heading under "Related Documents" below for further information.