Intentional or not, the Reserve Bank of Australia’s policy of eliminating the right for businesses to apply surcharges to each transaction is a boon for those businesses.
Surcharges have recurring, negative, and cumulative consequences. They have a “drip, drip, drip” effect in which satisfaction, repeat business, and customer loyalty are compromised, if not lost.
A price rise is experienced once. It is either accepted or rejected, then rapidly forgotten or dismissed from consideration by most consumers.
The introduction of GST (Goods and Services Tax) in July 2000 provided a stark lesson. Australia rejected pricing policies that quoted the price plus GST.
Australian travellers in the USA are sensitive to pricing policies detailing state tax, federal tax, and service charges. Cumulatively, these can exceed more than 25% of the base price. Ouch!
FAIR GO
The overriding issue for Australian consumers and clients is not the figures, 1.5%, 2.0% or 3.0% or payments of 10c, 50c or $5.00, but rather the principle of a conspicuous surcharge component.
Detailing and endeavouring to justify costs are not considered relevant or interesting to clients and customers.
Significantly, such surcharges are blamed on those who receive payments rather than those who apply the charges.
PRICE PACKAGING
Surcharges are identified as imposts, penalties, premiums, excesses, and overcharges, each of which has negative connotations for consumers.
The psychological effect is cumulative annoyance. Company and brand images and judgments about value are adversely impacted.
Business owners need to promptly determine whether to absorb the financial institution’s charges or reset their all-inclusive gross prices. Costs of doing business are prime concerns that need to be addressed once.
Ironically, this is not a costly lesson to learn and apply.
By Barry Urquhart – Consumer and Retail Analyst | Marketing Focus
BIO:
Barry Urquhart is a highly regarded market research and strategic planning consultant, recognised throughout Australasia for his insight, clarity, and thought leadership. A seasoned keynote speaker at premier conferences, Barry is also the acclaimed author of Serves You Right! And Service Please!, two of the region’s top-selling titles on customer service excellence.
Respected as a trusted voice in business strategy, Barry continues to lead influential workshops and development programs that help organisations drive sustainable growth, elevate service culture, and achieve competitive distinction.
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