the new trend that hurts your pocket more

Woman shocked by the amount of the invoice

What are the “surprise costs”, the new inflationary trend that ends with your pocket. Photo: Getty Images

  • Many companies are charging unexpected and hidden fees

  • This is how they combat the rise in prices of products without raising the original prices

  • It can become a counterproductive strategy that makes the customer more angry

Be careful. As inflation in the United States continues to break monthly records for the past 40 years, you may now have to deal with “hidden fees” or extra costs that are not necessarily in plain sight when making a purchase.

Those unexpected charges can show up under just about anything, from “non-cash adjustments” to “fuel surcharges” or something as ambiguous as “kitchen appreciation,” in the case of restaurants.

As reported by The Wall Street Journal a few weeks ago, with these surprise fees companies and small businesses combat rising food prices, without increasing the prices of the original menu. Yes, it is a kind of psychological strategy that marketing has been using for years.

“Welcome to the economy of hidden costs, where sneaky fees lurk everywhere, whether you’re buying concert tickets or spending your credit card at a bar,” Fortune magazine reported on Sunday.

The strategy is to attract buyers with a deceptively low main price before “dropping” an additional fee during the checkout process, Andrew Ching, an economics professor at Johns Hopkins University in Baltimore, told Fortune.

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At this time, any consumption can bring hidden a completely unexpected extra charge.  In the image, a terrace in the city of New York.  (Photo: Robert Nickelsberg/Getty Images)

At this time, any consumption can bring hidden a completely unexpected extra charge. In the image, a terrace in the city of New York. (Photo: Robert Nickelsberg/Getty Images)

While not a new tactic, according to Ching, it has become more prevalent in a post-pandemic world, grappling with higher overhead costs of goods and workers’ wages. Both airlines and Uber they began implementing extra fuel charges as oil prices spiked.

“Inflation has pushed up raw material costs,” says Ching. “But companies are concerned that if they raise retail prices, it will upset consumers. Pricing ‘drip’ (price drippingin English) is a more discreet way of increasing prices.”

For restaurants, it’s not just food costs that have risen, but labor costs, which are up 13.2% in 2021, according to the Bureau of Labor Statistics. Additionally, credit card companies such as Mastercard and Visa raised transaction fees in April.

It also occurs at large cultural events, such as concerts. A fan of indie pop band MUNA told Fortune that she was willing to pay the $73 for a ticket to their upcoming New York show, but didn’t count on a $23 service charge or the additional $2.50 wire transfer fee that appeared when you went to checkout.

“The extra $23 in fees can buy me a whole meal,” said the 22-year-old, who is currently unemployed. “I don’t have a full-time job, so I have to choose between having fun and what I need to survive.”

Over the shoulder view of young Asian woman shopping online for flight tickets on airline website with laptop, entering credit card details to make mobile payment at home.  Camera and passport on the table.  Travelplanning.  Booking a holiday online

What are the “surprise costs”, the new inflationary trend that ends with your pocket. Photo: Getty Images

A “surprise cost” is more painful in times of inflation

Most consumers are also grappling with higher extra fees, like Airbnb host fees or the service charge on an UberEats order, and some — even those who don’t pay much attention to the details of the purchase — see more difficult to decide when comparing the final price with the initial rates.

However, it is a mere question of psychology. Research from the Harvard Business School says that when we’ve already invested time and energy into buying, we’re equally tempted by what appears to be a “good deal” up front, even if it ends up being more expensive.

“Consumers exposed to extra costs tend to ultimately select this lower-based, higher-full-price option, even after they have been exposed to full price and given the opportunity to change their selection, and even though they are relatively dissatisfied with it”, says the investigation.

It’s especially painful for the average American household, which is currently spending about $311.78 more a month, according to consultancy Moody’s Analytics, which provides economic research on risk, performance and financial models.

These extra costs can backfire, especially as a growing number of Americans, even those making more than $250,000 a year, find themselves living paycheck to paycheck.

Mariel Beasley, co-founder of Duke University’s Common Cents Lab, says industries sometimes name extra fees to provide price transparency, but this emphasis can do more harm, especially if it’s something buyers don’t care about. they want to pay.

“Restaurants that add a fee for inflation help fuel frustration over inflation because they are highlighting it even more, and that could have consequences in the next choice that the client makes, “he said.

Beasley compared the moment of paying for a ticket to a concert with a meal in a restaurant. When restaurants add extra fees to bills, it adds to the pain of paying because the food, the best part, is over. So that will leave a bad taste in the diners’ mouths.

With a concert, Beasley says, the best part usually comes weeks or months after you buy the ticket. This counteracts some of the buying pain. “People are annoyed as it goes on, but what really sticks in their memory is the end of the experience: the concert.”

Perhaps that is why Pericak has not ruled out attending MUNA just yet. But he’s also trying to avoid service fees, buying a ticket from someone who resells it on social media, without such an inflated extra.

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