Effective price

The effective price (also known as the effective price) is the price actually to be paid for a service or product.

Definition / explanation

Similar to the effective interest rate for financial products, the effective price should precisely quantify a price or realistically map the costs in order to make products with a complex price structure comparable.

The calculation of the effective price

The following procedure has become established for calculating the effective price: All costs associated with an order are added. This applies to all costs incurred during the planned term. This includes amounts such as the basic price, an admission fee, ancillary purchase costs and network charges.

The areas of application

The effective price is used, for example, when comparing the following contracts:

  • electricity and gas
  • Subscriptions to magazines
  • Cellular tariffs
  • DSL and smartphone

Summary

  • The effective price is the actual amount to be paid
  • Realistic cost mapping possible through effective price
  • Use when comparing contract types
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