From “Free” to “Fee”

How one little “r” is making (yet costing) companies money.

It’s funny how one little letter can turn something a full 180 degrees. What was once FREE now only comes by way of FEE. If you are like me, you cringe at the mere mention of the word “fee.” To me the consumer, it’s a company saying: “This isn’t part of the cost of doing business with you. This is us going above and beyond, and you owe us for it, and we’re going out of our way to point that out.” And yet, as we so often see depicted in the business section on our favorite news outlets, this one tiny word can turn into a company’s biggest PR nightmare.

“No Hidden Fees” – Yeah, we come right out and brag about charging you.

We all know the stories of the outcry caused by companies announcing new fees in recent years. Bank of America took it on the chin when they announced a monthly $5 debit card fee; airlines were shunned when they started charging for a simple mid-flight beverage and checking a bag; Verizon Wireless got a viral earful for charging $2 for online payments.

Playing devil’s advocate, I can see why these companies are trying to create an “a la carte” process to their offering. Playing the price war is as important as ever. By creating add-on fees for specific services – services considered above & beyond the root product or service – companies create the lowest possible base price to be compared against their competition. Case in point, sites like Orbitz & Travelocity make a living at showing you services such as flights from various airlines listed largely by who is the cheapest for any given itinerary. Stripping these fares down to their bare necessity flight operation costs gives a competitive advantage… however… You want to bring a bag on the plane? Oh well, that’s extra. You want a soda? Sure, that’ll be $4.

The mistake I see these companies making is that they are picking services most likely used by the masses – not occasionally used “add-ons” – for which to charge, and that just reeks of pettiness and borderline gauging. For instance, Verizon’s online payment fee. I’ve also seen this listed as a “convenience” fee. In this day and age I would imagine a vast majority of their customers are paying online. (The irony in this one is that the bill customers are trying to pay, is for the very internet service for which they are using and ultimately being charged an extra fee.

Companies need to take a hard look at the implications before instituting such fees and really evaluate the hit they’ll potentially take. If you are charging a fee out of need to legitimately affect your bottom line, from a marketing/long-term customer relations standpoint, I think you are better suited tapping into your marketing dollars to cover those costs in an effort to do right by your current customer base. And promote to them what you did!!! In the long run, that’s money better spent in lieu of other superfluous marketing activities in an attempt to drum up new business.

Look for future posts in my on-going series “Free to Fee” where I’ll touch on specific encounters of “frivolous fees” and analyze the negative branding impact they have.