Thursday, September 11, 2008

The Inconvenience of Convenience Fees

It seems that lately, there are an increasing number of fees assessed on various services.

Recently, we looked into getting some tickets to take our Wiggles loving 22 mos old daughter to see the Wiggles show when they come to town. The tickets were $ 18 – 38 which didn't seem too unreasonable. But, when I looked into what it would cost us, I discovered that there were additional fees that would make the cost a lot more. For the $18 seats, it was going to cost us over $28. Fees increased the price a whopping 64%. A splurge for the "good" seats would have cost us over $48 a ticket. A slightly better "value" with the fees only increasing the cost by 28%.

If you are looking to attend a concert, show or sporting event, chances are, if you book on-line or by phone, you will pay a convenience fee for ordering the tickets. When we looked up the show we wanted to see, there was both a convenience fee for ordering through the ticket company (can you actually even still buy at the box office?) and a building fee. What is a building fee anyway? Isn't the building owner either getting a set price per event or a percentage of the sales? Seems to me, it's just an opportunity to make an extra buck. And, if that wasn't enough - want to print your tickets at home, the recommended approach, or expedite shipping instead of sending them through standard mail? You guessed it, there is an additional fee. They charge an additional $1.75 for you to print your own and up to $25.00 to expedite them through UPS. Even to pick them up at a ticket counter will cost you an additional $1.00.

Want to have your oil changed? They might advertise a great deal at $12.99 or $19.99, but if you read the small print, you will see that they will add a shop fee and an environmental fee to your order. Where we have our oil changed, it is $3 for the oil disposal (environmental fee) and $1.70 for the shop fee (a percentage of your total bill, reportedly to cover cost of rags and other disposable items used while servicing your car). Huh?! Aren’t those both a cost of doing business? These fees are 36% of the advertised price (or 27% of the total price), quite a markup.

Want to fly? Depending on your airline, you will be hit with added fees for everything from selecting a seat in advance, checking your baggage, being provided with a meal, and now even for drinks and snacks. All airlines add airport charges and security fees to the tickets as well.

And, banks – you want to talk about a lot of potentially confusing fees. If you don’t watch the details on your account, there are a number of fees that could surprise you and leave your account short (which of course will likely lead to more fees). Some examples of fees that you hear about: charges for using the ATM at a bank other than yours (charged by your bank and the bank whose ATM you are using), a fee for not maintaining a minimum balance, a fee for having too many transactions, fees for using the teller, a fee for bouncing a check, a fee for transferring money from a connected account to prevent bouncing a check, etc. I remember when you actually used to be able to earn money when you kept your money at the bank. Now, you are lucky to earn a couple percentage points in interest on your account, but if you don’t select the right account for your usage, you could pay more in fees than you potentially earn in interest.

Not a fee, but parking at amusement parks, zoos, etc. You buy a ticket for the park/zoo, but they also charge you to park in their lot. Your choices are limited in most cases. There aren’t often other lots to choose from and unless you have access to public transportation that services the location, your opportunities there are limited. It’s not like they are making money on people parking there to patronize other businesses, so why not include this in the cost of the ticket and offer free parking. If there’s not a per car fee, are they concerned that people will bring multiple cars. You are a captive audience; you have almost no choice but to pay this “fee”.

As a consumer, I understand, these businesses want to keep their prices competitive and make the deals they offer sound the best they can. If they rolled all of the costs of doing business back into their pricing structure, their pricing would not sound as good. By tacking on fees, they get around having to increase their prices.

Now, I know also that they all have to disclose fees to you before you buy, but let’s be honest; it is a lot easier to compare prices than it is to compare fees (or the resulting total cost) when comparing competing service providers. Frequently, the fees are in the fine print or are stated in your estimate or they are shown on your check-out screen. Or, chances are, things you don’t even pay attention too. Psychologically speaking, the lower prices are more appealing, despite the fees, and perhaps because the fees are only considered after the fact.

What fees do you encounter? What fees bother you?