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Two Ways of Framing a Surcharge

Published on March 10th, 2010

Have you ever found yourself in the immediate position of purchasing an item and noticed an add-on fee? The fee is your cost to have a bed or a sofa delivered to your address… or the prescription lens fitting fee my optometrist tacked onto my bill late last year (which made me see red).

Question: How do you expect customers feel about being stuck with add-on fees? Answer: Crap. You only have to get a parking fine in the Central Business District and you know exactly what add-on fees do to your relationship with the fee sticking organisation.

It might pay to think about two ways of framing an add-on fee based on a new sofa. The first framing adds a fee directly onto the unit price (the unsophisticated way most stores seem to use).

  1. Shop for sofa in several stores around your area
  2. Identify the price and product you wish to buy (eg. $500)
  3. Get stuck with a $50 delivery fee at the point of sale

In my opinion this is a shallow approach to managing the customer perception of that transaction. In the customer’s mind the psychological contract is made for the fee of $500 and the customer ends up paying $550 (10 per cent extra), which makes the customer feel unsatisfied.

Try the second way of framing that same transaction.

  1. Shop for sofa in several stores around your area
  2. Identify the price and product you wish to buy (eg. $550)
  3. At point of sale you are offered a $50 price reduction for self-delivery OR the store will deliver your new sofa for free

This is a superior way of framing the transaction in the customer’s mind because the true price of the sofa is honestly represented at $550. The customer no longer gets pushed over the final hurdle to spring an extra $50 at the checkout (where they feel most vulnerable).

Ask how much better you would feel at the point of sale if you are offered a $50 saving for self-delivery? Contrast the two ways of framing the customer conversation and tell me which one would make you, as a customer, feel better about your transaction with the store?

Nobody is saying stores do not have the right, or the business need, to charge for extra services. But how a business tells somebody about that surcharge is a large contributor to how the customer thinks about their post-purchase value. Which relates to repeat sales… which relates back to the bottom line.

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  3. Cold Steel (Book Review)
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About the Author

Steven Clark Steven Clark - the stand up guy on this site

My name is Steven Clark and my passions are business, web development, photography and writing. My current CV [PDF 775KB] discusses relevant work history and interests. Currently I'm in the second half of a post-graduate university degree of MBA (Journalism and Media Studies) at the University of Tasmania.

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