Whether it’s extra car hire fees or hotel Wi-Fi, we’re often left feeling ripped off, says the Financial Times' Tim Harford
LONDON: I once wrote that there are two types of charges. The ones you see coming and the ones you don’t.
Surrounded by heat-exhausted children, my wife was outraged. It was the principle of the thing. Europcar had found a way to charge an extra fee despite not supplying anything beyond the original service.In fairness to Europcar, the only reason we had booked with them was because their rival Avis had stiffed us for a substantially larger sum of money the previous year.
After all, businesses must still compete with each other and cover their overheads, so if these hidden charges could somehow be made to vanish, the everyday price might have to rise. The sales tax, of nearly 7.5 per cent, is traditionally added only at the checkout. When products were relabelled to show clearly both the usual pre-tax price and what the post-tax price would be, shoppers bought substantially less.
A company could, of course, make a great play of not engaging in such tricks. Why not offer a price with “no hidden extras”? Alas, there are two problems with this. The problem is that not all customers would find the promise appealing. Some would instead infer “if you are good at avoiding hidden charges, try one of our competitors, who will offer you a cheap deal in the vain hope of ripping you off”.
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