Our Friend, Hidden Fees

A new article in the Boston Globe explains why hidden fees work. You may have gotten that printer for free with your computer but you could be paying $1,500 in ink cartridges over the next four years.

According to some economic theorists, it’s actually more expensive to give straight up deals and pricing, because then you have to advertise not only your product, but another company’s as well. Sophisticated consumers will flock to the hidden fee locale, knowing to skimp out on the $25 can of Coke and $14 eggs at breakfast.

What do you think? Do you enjoy breaking out the microscope? Will these companies get bit in the ass by their own bad behavior? Or is there a cartel mentality, that if every company behaves badly, they will all get away with it? In your book, who are the worst hidden fee offenders?

“The Hidden Economy” [Boston Globe]

Comments

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  1. Ben says:

    Huh?

    I didn’t expect there to be any math today.

  2. Ben says:

    Nobody else has said anything, so let me toss this out:

    Using their examples of discount hotel rooms: how many travelers are on a business account? When I travel, my company pays for phone calls. There isn’t a dollar limit. Same for meals. But they do ask that we stay at the cheapest place rate-wise.

    Same with rental cars. They gotta buy my gas, there’s no incentive to shop for price.

  3. AndyfromIL says:

    credit cards are an easy target, my pet peeve is the cards that charge interest for two months, not one on charges. Just when you think you have paid off the account, the next statement comes with interest charges on it.

    It is totally hidden extra interest to people who never pay off their account and cant do math.

  4. LintMan says:

    With printers at least, you can sometimes save money on consumables over the long term by spending more up front on a better printer – possibly way more than enough to cover the price difference.

    An ink refill set for those cheapie color printers – especially those you can get for $40-$75 can sometimes cost nearly as much as the printer itself does. Typically multiple inks are combined in one cartridge so you have to replace them all when one runs out. It’s the razor/razor blade theory in action.

    But for many printer brands, if you’re willing to spend more up front (say, $150-$200), you can find inkjet printers that have individual ink cartridges that hold more ink and and more economical than the cheapie printers (and have better quality to boot).

    So the reality in the printer world at least, is that most everyone who’s actually buying ink at a rate of $hundreds per year for their cheapie inkjet wises up and starts looking for cheaper options (and likely better quality images) long before 4 years go by. The people who stick with the cheapies for years and years are mostly the casual users with light use and less need to refill frequently.

  5. Kat says:

    Cell phone companies… when I was a teenager and first signed up for one, my account was supposed to cost $29.99 a month. I didn’t realize that between all the different kinds of taxes, there’d be an extra $10/month!