Hidden Charges

I am not sure why consumers put up with companies like Ticketmaster that heap on additional charges at the checkout counter.


I truly believe that Ticketmaster adds a lot of value when purchasing tickets for an event. As a consumer, I like going to their site and viewing just about any event I want to attend. The site is user friendly and ticket purchases are very easy (assuming you are not looking to buy for Radiohead, U2, etc). Given this value add and their near stranglehold on the market, I am not sure why they hide the true cost of the ticket.


Here is a recent example from a Hawksley Workman ticket purchase.


The tickets were advertised as $32.50.


However the final bill comes to over $41.00 per ticket with all of the additional charges applied.

Here was the breakdown:

Advertised: Full Price Ticket CA $32.50 x 4

+

-Total Building Facility Charge(s) CA $2.50 x 4
-Total Convenience Charge(s) CA $5.50 x 4
-Order Processing Charge(s) CA $2.25 x 1
-Regular Mail = No Charge

TOTAL CHARGES CA $164.25


Final individual ticket cost = $41.06, a 26% surcharge over the original cost.


What gives?


As a consumer, I am more than happy to pay $41.06 to see Hawksley Workman. This is more than reasonable. Why not just be up front from the beginning?


Companies who employ this sneaky strategy typically do this for the following reasons:


1. They don't want to look expensive in the market place, so they lead with a cheap price and then add to the price once the customer is at the checkout counter when the chances of walking away are slim. This practice is also fairly common in the online promotional products space where some companies advertise products without decorating charges, thus making them look inexpensive compared to other companies.


2. They want to disclose to the consumer all of the individual components of the sale so as to elicit sympathy that Ticketmaster is really only making peanuts on the transaction.

As far as I can tell, I think most people don't really care where the money goes so long as they value what they are buying at a given price. An additional convenience charge or a building facility charge is just annoying. Be upfront about this from the start. Sure, tell me at the end if you must, but don't heap on the additional charges as I click through the checkout process. This only serves to irritate.

I relate the following example in our business.

Imagine the following scenario. A $10.00 T-shirt advertised on our web site as:

$1.00 T-shirt!

+ $2.00 printing cost
+ $2.00 transportation charge
+ $1.00 thread match charge
+ $1.00 employee lunch fund charge
+ $0.50 company profit
+ $2.00 computer server cost
+ $0.50 dye charge

= $10.00 total.

I understand that it costs money to produce a product, but you shouldn't be in the business of annoying your customers with hidden charges. Note that hidden charges are different than extra charges. To be fair, extra charges are legitimate when they advertised clearly as such so the consumer is aware of what they are getting into. (ie. the cost of buying a book on amazon.com excludes freight if under $39, or the cost to print this mouse pad excludes a $50 setup fee).

A famous quote in business says that "in the absence of value, companies can only compete on price." On the web, companies should not be afraid to post the fair value of their products without resorting to shady practices like tricking the customer at the end of the process with random charges. If your product/service is worth it, people will always line up to buy it.