Vat conversion rates (UK)

[MrFrisbee]

Does anyone have any evidence about the impact of displaying or not displaying prices including VAT on your website on conversions?

A client wants to show prices excluding VAT so the prices look competitive with their competition who also display excluding VAT (20% UK sales tax).  I have explained that the sudden 20% increase to the basket cost will put off a lot of customers (even if all prices are marked as excluding tax) but they will not listen.

We have previously displayed both prices but this looked messy and customers got confused.  What I really need is some research that shows what the impact of doing this is (ignoring the fact that it is not even allowed by HMRC).

Any thoughts welcome!

[Alick300]

Hi,

I am sharing my personal experience on my website with .uk extension. In categories pages I am showing excluded price. When customer click on 'buy now' button they go to product page where I am showing both price including & excluding vat both but I have highlighted included price with bold & some graphics. For me it is working well & conversion rate is fine.

Thanks

[PatrickDelehanty]

Hi there

This really could go either direction - showing the VAT or not. Some users might appreciate that sort of thing, but you should really A/B test this sort of thing instead of choosing one side or another.

You can take advantage of testing these scenarios:
VWO
Optimizely
Google Experiments

Testing will give you a clearer picture of what route to take in this situation based on your audience. Every site and audience is different, so testing is the best route to go. You should check out VWO Resources section - it's packed with ideas and stats based on industry and the types of tests you want to run.

Hope this helps! Good luck!

[TomRayner]

I think the biggest influencer in this decision would be what the client is advertising.

If they're advertising mainly B2B, exclude VAT. If it's B2C, include it.

There are exceptions to the rule - for example, websites like Scan.co.uk and eBuyer.com will typically show ex VAT prices more prominently, but that's because, while being a retail website, most of their bigger orders come other businesses.

So I would ask who is it that your client typically serves - businesses or individuals?

If it is individuals you are obliged to show the VAT price before the purchasing decision (add to basket) has been placed, pretty sure that's a legal requirement.  You can display both, as Scan and Ebuyer too, and that will suffice.  And if you're paying for Google Shopping inclusion, Google is sophisticated enough to know which price is your VAT and non-VAT price and will show the VAT prices in its results (if applicable).

Nothing wrong with showing both - but if you plan on showing one, it all comes down to who the website is intending to serve.

[MrFrisbee]

Both valid answers of course - just was hoping for someone to say "read this - its obvious".  It is such a common discussion with clients who serve trade and consumers but data seems thin on the ground.  A/B testing hard to do on a small site and get valid results.

[PatrickDelehanty]

This is fair. I really like Tom's answer as well - lots to think about.

Have you considered surveying your audience or checking into what are your competitors doing? The issue is, this isn't an obvious yes or no, there are factors and you have to consider the audience, the industry, and how your site is set up. In my opinion, you're betting off testing these sorts of things as no two sites/audiences are the same.

[DirkC]

Read this, it's obvious

If you are selling to B2C customers in the UK you have to include the VAT in the price your list - it's a legal obligation (this is the case all over Europe)

Quote: Any <abbr title="Value Added Tax">VAT</abbr> due is already included in the price of something you buy in a shop. No tax is added when you pay.

Source; https://www.gov.uk/tax-on-shopping

rgds

Dirk

[PatrickDelehanty]

I stand corrected! Thanks Dirk, this is great! =]

[MrFrisbee]

Dirk, I perhaps was not clear enough - I am not suggesting that prices are displayed without VAT alone.  We would display both (for the reasons you point out).

The point is that many non B2B customers get confused by 2 prices, particularly those from overseas and it makes the site look a mess.

My recommendation is emphatically to display just the inc VAT price as that is what everyone pays and it removes any confusion.

I guess this discussion proves that there is little evidence to show the impact of this on conversion rates.