Intentional or not, the Reserve Bank of Australia’s policy to eliminate and remove the right for businesses to apply surcharges to each transaction is a boom for those businesses.
The consequences of surcharges are recurring, negative and cumulative. It has a “drip, drip, drip” effect in which satisfaction, repeat business and customer loyalty is 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 which quoted the price plus GST.
Australian travellers in the USA are sensitive to the practice of 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 to be relevant or of interest to clients and customers.
Significantly, blame of such surcharges are assigned to those who receive payments, rather than those who apply the charges.
PRICE PACKAGING
Surcharges are identified to be imposts, penalties, premiums, excesses and overcharges – each of which has negative connotations for consumers.
The psychological effect is cumulative annoyance. Company and brand images are adversely impacted, along with judgements about value.
Business owners need to promptly determine whether to absorb the financial institutions charges or reset their all-inclusive gross prices. Costs-of-doing-business are prime concerns and need to be addressed – once.
Ironically, this is not a costly lesson to learn and apply.
Barry Urquhart
Consumer Behaviour Analyst
Marketing Focus
M: 041 983 5555
E: Urquhart@marketingfocus.net.au