NOTE: This article was originally written in 2023, and only getting posted now.
Recently, our favorite movie theater joined “the cool kids” and started charging extra fees to buy tickets online via their app or website. They held out quite a long time and, because of this, they became our go-to place to see a movie. We stopped going to our other favorite place (which was closer) due to their fees.
At least you can still drive across town and buy a ticket in person (from a machine) and not have to pay that fee… If there are seats you want still available… For now…
“We think nothing of it.”
The more we try to defend and justify extra costs being passed on to us, the more of them I expect we will see. We should all know that when we buy something, we are paying for salary, building cost/rental, electricity, and all the overhead associated with selling the item. This is all factored in to the price we pay. That is the way it has always been, and we think nothing of it.
Delivery Fees
Having a delivery charge to deliver was normal. That is the way it always was, and we thought nothing of it.
But then came delivery-only places that included it in their cost of their food.
Domino’s was disruptive.
Shipping & Handling Fees
We were also used to be “shipping and handling” feels when ordering something from a 1-800 number. That is the way it had “always” been, and we thought nothing of it … until places like Amazon came along and started shipping for FREE (with a minimum purchase).
“Free delivery” was a value-add that helped businesses succeed over others that charged for delivery. (Even if many “dot com” places lost money for years and years before ever making a dime of profit.)
Amazon was disruptive.
Taxi, anyone?
Remember how expensive taxis were? They would charge for the 1/8th of a mile AND time you spent in the car, so you paid for sitting at red lights. Uber, Lyft and other ride sharing services got rid of all those fees and offered a simpler flat rate.
Rideshare was disruptive.
So what changed?
Yet we have been seeing some legacy businesses (restaurants, movie theaters, etc.) reverse this trend and go the other way by charging extra fees to order online or for using a credit card. Could you imagine Amazon succeeding if they charged a service fee to place the order online, or a service fee to use a credit card?
And clearly, this is a choice. Businesses seem to want to make their prices appear lower, and then pass on extra fees to the customer and hope they are okay with that. (Or that they don’t notice…)
…but at the same time…
Yet, businesses that have gone cashless and take credit cards only do not charge service fees for using credit cards! They just have that factored in to their cost, along with salary, electricity, building rental, etc. Meanwhile, more and more cash/credit places are finding out they can make extra money by charging 5% (or more!) for using a credit card.
Just a few years ago, the same businesses just factored this in as a cost of doing business.
Defending the fees gets more fees.
Folks will defend this by saying “there are high fees to take credit cards.” This is true, but today, try to find a table at a farmer’s market or craft show where a sole proprietor isn’t able to take credit cards. Now try to do the same twenty years ago. It used to be quite expensive to process credit cards — so much so that if you did not have a huge volume of charges, it was not practical to take them at all. But today? Anyone can take a credit card for a small fee.
I’m old enough to have worked at a mom-and-pop store back in the late 80s/early 90s that had the physical credit card swiper. We had to phone in to verify every credit card charge. Good times.
Later, in the early 2000s, I had my own credit card swiper so I could take credit cards to sell my CD at shows I did — though I could only afford this because the company that distributed my music was acting as the processor. They took a small cut on top of the credit card fees. Even with us selling our CDs for $5, this was well worth it for the extra sales we could make to those who didn’t have cash one them. Those extra sales would have been zero if we didn’t take credit cards.
If raised with fees, you accept fees.
We have come a long, long way, but unfortunately, we have a new generation that just accepts these fees, and thus will likely get more and more of them.
Even when they seem to be a scam:
- If I order a $7 drink in the app at the theater and pay with a credit card, there is no extra fee.
- But if I order a $7 movie ticket in the same app, there is a $1.50 “processing” fee.
I assume this is because they outsource the ticket handling.
Hey, theaters: If your primary job is selling tickets (without selling tickets, no one is there), shouldn’t this be part of your business cost? It always was in the past. The grocery store does not add on a “refrigeration fee” or “warehouse storage fee” when I buy a carton of milk.
Is 22% too high for a fee?
After recently seeing service fees that amounted to a 22% surcharge to buy something, I think we are done buying from that business. And that was here in Des Moines.
We have seen where the acceptance of these fees can lead. In August 2023, SeaWorld in Orlando went cashless. They now accept credit/debit cards only. And, they have started adding an extra 5% fee to anything you buy. It comes across as a money grab. If your prices are 5% higher, list them as 5% higher. It seems very misleading to say something is $24.99 on a big price sign, only to find out it’s really $26.24 when it rings up. Annual pass holders that get 10% off a purchase are now getting 5%. Even in the days when credit cards were much more expensive to process, they never did this.
But today, they do. Because they can.
Since we now see fees at restaurants and movie theaters, I expect it will continue to spread as businesses figure out more ways to get more money while leaving the advertised price the same. This goes well with Shrinkflation, where we pay extra to buy it, and get less.
If you’ve seen any new kinds of retail fees that surprised you, leave a comment.
Until then…
