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In the age of Web commerce, shoppers can find the lowest price with a click. The grim reality for businesses is that the lowest price tag usually wins.
How can a business raise prices and still compete? Isolate a cost, tack it on to the bill and call it a fee. The price tag is intact, and "fee" and "surcharge" sound almost inevitable, even downright governmental.
"Increasing the price creates challenges for companies," said Tim Calkins, a clinical professor of marketing at Northwestern University's Kellogg School of Management. "But creating fees is a little out of sight and out of mind."
At hotels, cable companies, banks, airlines, stores -- nearly everywhere -- the fees are mounting.
"I call it the death of the price tag," said Bob Sullivan, who writes MSNBC's Red Tape Chronicles blog and is the author of "Gotcha Capitalism: How Hidden Fees Rip You off Every Day and What You Can Do About It." In his survey of 2,000-plus consumers, charges added to everyday bills averaged $950 per year.
Here's a sampling of our "favorites" (you can share yours here):
The careful-what-you-ask-for fee. If your Air Canada flight is delayed due to weather or heavy traffic, agents will be happy to help you find a hotel, restaurant or flight -- as long as you've paid a $25-to-$35 "On My Way" fee. Once this was something airline agents did, you know, just to help out. But in this age of fees in flight, the travel experience has been deconstructed.
For example, check out this list of fees from Delta Air Lines, which will now charge a $3-per-bag "administrative fee" for curbside check-in and a $25 "handling charge" for awards tickets that use another airline.
What do the airlines say? Basically, you asked for it. You wanted cheap flights, and you still demand cheap flights. But with already slim profit margins and rising fuel prices, fees are the only way airlines can remain competitive.
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The some-are-more-equal-than-others fee. Even one-class-for-all Southwest Airlines has entered the mix. Pay a "business select" fee of $10 or $20 and you get first boarding, an extra reward point and a free cocktail. The value? Southwest hauled in $7 million in the program's first eight weeks alone, spokesman Chris Mainz said.
"Instead of charging for things we're already giving them, we're trying to get creative," Mainz said. "We can't just raise fares in response to the cost of fuel rising."
See "10 'sneaky' airline fees" for more.
The it's-not-easy-being-green fee. In March, U-Haul started charging $1 to $5 to offset its waste-disposal costs, calling it an "environmental fee." The trailer- and truck-rental company said that mechanics and oil-change shops charge similar fees, and that for years it had been absorbing these costs.
Poster "gcallaghan" at The Huffington Post wrote, "It's like an implicit threat to toss the stuff in the nearest wetlands if we don't pay."
The Sierra Club agrees the term "environmental fee" can be misleading, implying the company is taking extra steps to help the Earth by purchasing carbon assets, for example, or setting aside land. "But properly disposing of waste is something everyone should do," said David Willett, a spokesman for the nonprofit group.
The overworked-landlord fee. So you and the roommates swung the nonrefundable credit-check fee, pet fee and cleaning fee for your new apartment. Now make sure not to send in more than one rent check to avoid a "processing fee." Slocum Apartments in Pullman, Wash., explains that its $20 multicheck fee is to simplify the owner's bookkeeping tasks.
The put-it-back-where-you-got-it fee. Along with the banquet of fees that hotels have added in recent years is one of $5 to $10 to restock the minibar. Yes, that's after the $10 charge for the peanuts. (And some minibars now come with electronic sensors that automatically bill your hotel room if you even pick up a Snickers.)
PricewaterhouseCoopers reported that hotel fees brought the industry $1.6 billion in 2006, triple the amount in 2002.
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Airline customer service in a tailspinConsumer complaints were up over 60% in 2007, and overall performance declined to its lowest level ever, according to an airline-quality survey.
The $30-or-we'll-lecture-you-for-eight-hours fee. Get hitched in Texas and you'll pay an extra $30 for your marriage license if you don't complete an eight-hour prenuptial counseling course. It's one of several states with the requirement. One argument is that couples are better off economically than singles.
The one-ringy-dingy fee. Oklahomans with AT&T land lines started coughing up a 2% "line inspection fee" in February. The company's rationale had a familiar ring: The city makes us maintain the rights of way, and we've been paying the cost ourselves for decades.
If that doesn't fly, there's always Telephone Company Explanation No. 2: Everyone else is doing it! At least that's what a spokesman told the Oklahoman newspaper.
The we-don't-need-your-stinkin'-taxes fee. Residents of Ironton, Ohio, will pay two more years of an $8 "public safety fee" to help pay for police officers' salaries and equipment, items typically covered by taxes through the city's general fund.
Bob Cleary, the only City Council member to oppose the charge, argued that "the people of Ironton are being 'feed' to death," The Ironton Tribune reported. He was overruled; the other six members liked the $529,000 it saved Ironton in . . . taxes.
The world-is-shifting fee. The University of California, Santa Cruz, recently raised its "seismic safety fee" from $25 to $40 a term. Yes, that's seismic, as in earthquake. The money goes to improving the integrity of campus buildings to protect students in a quake. These students may live on shaky ground, but the long list of fees they pay has become part of the financial bedrock of universities everywhere.
Continued: The 'convenience' fee