Should merchants be made to stop adding fees to your purchase and instead roll all that into their prices?

In My Humble Opinion
1

California has a law coming into effect soon which will ban “fees” from hotels and restaurants (at least).

I, for one, love this idea. The merchants are not happy but I do not see the problem. They can just roll in the money they make from those fees into their prices. Yes, prices go up but they all do so the playing field is still level.

I am increasingly annoyed by “fees” added on. For example, a huge restaurant group in Chicago (Lettuce Entertain You) adds a 2.5% surcharge to all bills. They started during COVID saying it was necessary to cover the extra costs of sanitizing things sufficiently (which makes one wonder, were they not sanitary before?) Of course, they have kept the charge. You can tell them to take it off but it is never prominently displayed you are paying the fee and can ask to have it removed (which also seem petty when at dinner).

Is there some reason this is a bad idea? Merchants should be allowed to do whatever fees rather than just rolling it all into the price of whatever they are selling?

2

It is a good idea, the fees, especially hotel and airline fees are kind of a minor form of bait and switch. Stay for just $89.99 then add tax, travel tax, security fee, local municipality fee, no flea fees and fee fees.

3

Indeed.

A couple months ago I flew Spirit Airlines to Florida (from Chicago). I know they are a low cost, fee heavy airline. What got me is their advertised fare to Florida was something like $70. Great I thought! Nope. That is for a ticket but not a seat. You literally then have to pay more for an actual seat on the plane (and prices vary a lot depending on which seat). Almost doubles the cost. That’s some bullshit.

4

Do they let people stand up on the plane! :rofl:

5

WI you don’t actually pay for a seat per se? Do they make you sit on the wing or in the cargo hold?

6

Right?

Of course, you must pick a seat and pay for it.

But, when searching airfares they show up as $70 (or whatever). Then, when you get into the booking, they hit you with things like paying another $50 (or whatever) for an actual seat. They lure you in with the low fare then clobber you.

7

That isn’t even a minor form of bait and switch, that is straight up bait and switch and I wish that was illegal.

8

SRO Air. “We keep you on your feet”.

9

I’d like to see this in place for every industry. As a consumer, I experience “post-sticker-add-on” pricing as an intentionally adversarial position the business is taking against me. If you, as a business owner, want to set up that kind of relationship with your customers, that’s on you, but don’t be surprised when those customers respond in kind.

From the article:

In other words “if we told customers what they have to pay before they sat down, they won’t come out to eat any more and I’ll have to fire people, and it’s all the fault of government regulation!”

Imposing “significant menu price increases” sounds scary, but it’s a graphic design problem only. The cost of dining out, and the costs of running a restaurant, will not change at all.

10

I am all for “out the door” price including tax. It’s simply truth in advertising.

Vegas is especially horrible for a cheap hotel price, with “resort” fees, internet access, visitor tax, local tax, and whatever else bullshit they come up with. Just tell me, the room is $199 on the final bill. Don’t advertise it as $99 and then sticker shock when I check in and even more sticker shock when I check out.

It’s a level playing field, so the market and customers will all adapt.

No different than raising the minimum wage. Every fast food restaurant has to pay at least that minimum wage. It’s equal. Rewards the restaurants that have figured out an acceptable experience with less labor.

11

I wish they would do that with cell phone rates too. My cell phone company advertises $25 a month, but by the time taxes and fees are added it’s $36. There is one that advertises $25 with fees included (not sure about taxes) and I’ve been thinking about switching. I’m cheap that way.

12

Yes. I am tired of stores/restaurants/hotels in the U.S. adding tax after you check out. In fact, there are a lot of hotels in Europe which charge the city tax only at check out, even if you pre-pay. Annoying.

13

In the UK all compulsorary charges must be included in the headline price. If I go into a store to but one or two items I know when I go to the till how much I need to pay. In the US they then add tax so I don’t have a clue if a $10 bill is enough for an Item costing $7.99 and one costing $2.25.

Before it became law it applied to most things but there were exceptions such as airlines. Easyjet and Ryanair were renowned for advertising tickets from £0.99 but when you added tax, airport fees, etc it would be much closer to what you expected. The didn’t like the law and one airline tried having a fee for any booking not using their credit card (which had a hefty annual fee) but that was also ruled illegal.

As far as optional prices they have got quite creative. you have the option of paying for a specific seat, if you don’t buy one you will be allocated a random seat at check in. There have been cases where a parent and kid have been at opposite ends of the plane and had to beg another passenger to switch seats. Some airlines now charge for hand luggage. There was rumours they would charge for use of the toilet but this hasn’t happened yet.

14

I’d support it for fees that are added by the merchant, but I can see the point of posting prices net of tax, with the tax added afterwards. One, it’s easy to predict the add-on because the tax rate is generally known (unlike all the additional fees that the creativity of hotels, stores, restaurants etc. keeps coming up with); two, it has a restraining effect in the political debate about taxation, because it makes it clearer to voters how much the tax actually is.

15
16

I’m pretty sure in every country and currency 10 isn’t enough for 7.99+2.25.

17

Usually you don’t have to pick a seat, it’s skippable. And you will be assigned one, most likely a back middle seat.

18

Or maybe it causes politics to place too much of an emphasis on nickel-and-dime taxation instead of the actual business of government. I wouldn’t be surprised if it turned out that the American distrust of government (and thus, support for movements like MAGA) was subtly reinforced by American retailers’ obsession with rubbing taxes in consumers’ faces.

19

They should be forced to add any mandatory charges into their price. If I cant get around the resort fee, it should be baked into the price. If I can avoid a fee for checked luggage by not having checked luggage. I’m OK with that being a separate charge. If I’m buying a ticket to a concert, it should include any per ticket fee that cannot be avoided. Service fee and facility charges that are per-ticket should be required to be included ( as is already the law in some states). Delivery fees don’t have to be included as long as there is at least one free method for get tickets - I’m OK with a charge for mailing physical tickets as long as I can pick up at the box office or get an electronic ticket with no charge. Per-order charges can be separate as there is no way to predict how much should be added to each ticket for a $10 per order fee ( it will be different for buying one ticket vs four tickets).

As far as ordinary sales taxes, I’m OK with those being separate for a couple of reasons. The main one is that sales taxes are different for different situations - if I buy furniture in State A and have it delivered to State B, I pay State B sales tax. And if State B doesn’t have a sales tax, I don’t pay anything ( this is how Leona Helmsley famously avoided sales tax.) This happens even with purchases in the same state but different taxing jurisdictions. A state might exempt out of state residents from sales tax ( Washington used to exempt Oregon residents from sales tax at retail stores) . But in situations where none of that applies (restaurant meals for example,) pricing should be required to be all in.

20

There is a fundamental difference between a la carte pricing and fees.

Every breakfast joint in USA will be happy to sell you a side order of two eggs, a side order of bacon, a side order of hash browns, and a side order of toast off their individual items list, but also has the “All American” or whatever cutesy name for the same thing as a package deal. And probably for slightly less total price than the four a la carte items. Pizza places are the same, where the [whatever combo pie] costs a bit less than starting from a plain cheese pizze and adding the same toppings.

OTOH, adding a 2.5% [whatever] fee, or the increasing habit of rolling in an 18% “service charge” (where you don’t know if 100% of that is going to the actual server as a tip), is a whole different thing. And is IMO indefensible.

Further IMO taxes, if any, should NOT be rolled into the displayed prices. It’s better to display both pre- and post-tax prices, but if there’s only room for one price, make it pre-tax. Yes, even for highly taxed situations like hotels and rental cars.


With that background …
I will slightly defend Spirit Airlines’ pricing of seats as a version of a la carte. The plane is divided into zones, both fore/aft and aisle vs window vs middle. Each zone has a different price. No different than a burger or pizza that has some basic toppings included in the price, plus another dozen optional toppings available probably in 2 or 3 price tiers.

The rest of Spirit’s a la carte services, such as carry-on bag, checked bag, food, drink, etc, etc, are individually defensible because not everyone needs everything and some people need zero of those things. The consumer challenge comes in when the conventional old-fashioned airline model was “all inclusive”: you could bring a silly amount of both checked and carry-on luggage, and be fed & liquored up, all for one price. In restaurant terms, that’s like somebody who grew up eating only at all you can eat buffets then as an adult being introduced to conventional restaurants with menus containing both pure a la carte items and combo meals such as salad, meat, veggie, and starch.

Admittedly with Spirit, the collective effect of wall-to-wall a la carte pricing is surprising to most everyone. Which just demonstrates how used we all became to airline ticketing being eating buffet style with a little bit of 10 things heaped on our plates.


Bottom line: Sometimes deciding where the line between a la carte and combo meal belongs can be hard. e.g:

It wasn’t that long ago that every electronic gizmo came with a wall wart & power cord. Now few do, but they do include a charging cord with one end that fits the gizmo and the other end is USB-A or (increasingly) USB-C. Now you need to provide your own USB charging hub. I expect that if industry can ever settle on one nearly universal connector standard, call it USB-U for “Universal” (I just made that name up), then real soon even charging cords won’t be included in the 99% of devices that use USB-U. You’d be expected to provide both the USB charging hub, and the matching [whatever] to USB-U cord.


My bottom line: There is a good discussion / rant to be had about fees. But IMO it's important to distinguish between increasing *a la carte*-ism, "shrinkflation" of expected accessories (e.g. charging cords), and automatic everyone-pays add-on fees. Both mandatory and [mandatory unless you Karen/Chad to the manager] fees.