September 29, 2003
Fees & Surcharges Replace Selling Price as (Apparent) Sole Means of Corporate Profitability
I was wondering where all the inflation had gone to lately – jettisoned with any pricing power in a post-recession jobless recovery, perhaps?
Not hardly! In a great BusinessWeek piece ("Fees, Fees, Fees"), we learn that customer fees and surcharges are the real engine of profitability at far too many (mostly big) businesses… Is this just deceptive marketing, or a way for everyone from banks to airlines to telephone companies to stay in business in the Internet era where everything’s a commodity, price transparency makes for powerful consumers and competitive differentiation is hard to come by?
My opinion: it's a rip-off to pay $100 change fee to switch a flight, $2.50 to use an ATM, or pay $4 bucks a gallon to get my rental car refueled... and don't even get me started on my phone bill!
My prediction: upstart competitors will use the consumer backlash against surcharges as a real differentiator for themselves, to the detriment of their larger competitors.
- Arik
Posted by Arik Johnson at September 29, 2003 02:28 PM | TrackBack
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