Each deal has a bottom line price. So why not quote that single number that has to be paid by the buyer?
Consumer Advice Organizations favor the All-in price setting to enable better comparison among competitive offers. And there are good reasons for it: In many industries companies try to put a low price in their shop window that will increase dramatically by surcharges in the course of the booking cycle.
- Airlines add fuel and security surcharges
- Car Rental companies add insurances and airport location surcharges
- Car manufacturers add delivery to the dealer site, etc.
Surcharges that apply to every single deal should be part of an All-in rate.
But there are exceptions. For example rates in air freight used to exclude fuel charges. It originally enabled fixed annual rates along the value chain with floating fuel surcharges based on the crude oil price index. But some market players started to use the fuel surcharge to improve their margin. In addition fuel hedging and currency exchange rates made transparency of the real fuel cost nearly impossible. Consequently some cargo airlines like Emirates and Qatar got rid of the surcharge logic this year and now offer All-in rates.
But what if the product or service can be customized to fit individual buyer needs? In this case All-in rates are not suitable.
Premium airlines such as Lufthansa push their own booking platforms to offer a more customizable product. Instead of choosing between traditionally three product classes (First, Business, Eco) customers can choose if they want to reserve a seat, check more luggage, enjoy food and drinks etc. We will see a lot more product features that either have been unbundled from the formerly All-in price or that have not been bookable in the past, such as lounge access, special events, limousine service, etc. The aim of the airline is to generate more profit from passengers who are willing to pay for it and at the same time have a more competitive offer for those passengers who focus on the cheapest price.
So who is the winner of All-in rates?
The customer is! – If All-in includes all mandatory price components. But All-in must not be mixed with customer oriented product differentiation.