The growing trend of adding 'additional fees', is this good or bad?

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Sometimes it’s a “processing” fee. Sometimes it’s called an “admin” fee. We have even seen it labeled “convenience fee,” a refreshingly candid explanation for it. However, they are always additional fees, and if you have them in your pricing, they might have terrible implications for your customer experience.

However, they might not. Unfortunately, there isn’t a lot of scientific evidence that points to a definite negative effect on additional fees for a customer experience. For my part, it leaves a sour taste in my mouth when I get hit with one, so, my presumption is that I am not alone.

However, our listener Brian Williams wrote into us with a pickle. His company is facing rising costs and are debating the merit of raising prices over additional fees and vice versa. Unable to decide—or just wanting an outside perspective—they wrote to us to find out what we think.

It is a quite a pickle. Probably one that some of you are facing, too. There isn’t a clear-cut answer either. However, there are some important considerations that can guide a decision to go one way or the other.

In this episode, we explore these considerations, the possible fall out from them, and give our opinion on what Williams and his company should do.

Are you “in a pickle” at your firm, too? Tells us about here and we might feature your pickle on an episode of the podcast.

Here are some other key moments in the discussion:

• 01:48 We present Williams’ business pickle and why this is such an area of interest today, and for more than Ryan and his academic friends.
• 04:21 Colin shares a couple of instances where additional fees soured his experience.
• 07:57 Ryan gets into the theory behind what’s going on with additional fees and why they are so common in an era of inflation.
• 17:32 We introduce the topic of tipping and how it is a form of Two-Part Pricing also, and becoming too steep and too ubiquitous to sustain itself in the U.S.
• 26:24 We explore whether additional fees are a form of transparency, and what the fall out can be from listing out fees as line items in pricing bids.
• 29:23 We share our advice for Williams, and anyone else facing this same problem.

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