According to Travelocity.com, consumers paid $3.6 billion in 2011 for baggage fees alone. This statistic is even more staggering when you consider that bags all flew free until 2007. But baggage fees were just the beginning. Now airlines charge for pillows, snacks, movies, Wi-Fi, seat selection, booking changes and in-person ticket purchases.
Never mind that airlines and fees are fodder for comedic ridicule and cartoons; in four short years the industry found a way to develop a large and lucrative revenue source that, for them, outweighs any consumer backlash.
I think that, in general, people hate fees. They would rather have a comprehensive price up front so they can weigh the information and make an informed decision. With all the on-line booking tools, I wonder how many consumers took their portion of the $3.6 billion into account when comparing prices. Did they really get the best deal?
There are many other industries that are fee-laden. Real estate with its myriad closing costs. Hospitals, with a la carte pricing for each individual item used in complicated surgeries and emergency visits. Rental cars, the base price of which can double with additional charges. I work in higher education, an environment that is also known for its fee structure beyond the primary price. It is tuition plus fees at every school in the land.
There are many reasons for industries to establish price structures as they do. On one hand, it is a more fair system because those who use the extra services pay the increased cost. But it does make true price comparisons difficult until very late in the process.
Look at your pricing as if you were Jay Leno and see if there is material there for a laugh. If there are hidden charges, nonsensical fees, unexplained surcharges or it is impossible for you to know the true cost, you flunk the transparency test and need to regroup. On the other hand, if your charges are relevant, published and clear then you pass the Leno test and shouldn't have your customers laughing at you.
-- beth triplett
leadershipdots.blogspot.com
@leadershipdots
leadershipdots@gmail.com
Source: Real Simple Moneywise, March 2013
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