Nobody wants to raise prices but everybody wants more money. In the past week, I've seen under the line mandatory fees from a pet grooming service ($5.99 required "materials fee"), a large apartment operator ("technology package fee" to have mandatory access to the resident portal), and a bookstore ($2 order handling charge).
Hiding the actual cost with sneaky fees is getting out of hand and I have zero sympathy for "oh the poor merchants" or "showing the proper price is too hard." They made the decision to impose the fees, they can make the decision to put them in the price where they belong.
And yet somehow it's always possible to have the proper price ready when billing your card.
Here (Australia) if a manufacturer or dealership advertises a car at a price, they have to sell the car for that price and no more if someone shows up at your showroom. In practice this does make life complicated, I worked on Toyota's website a decade or so back, and there was a quite complex attempt to geo locate users so we could know which state they were in, because each state has different registration/insurance/on-road-costs, so depending where you were, we had to show a different final price. (It was usually only a few hundred dollars difference, and we also went out of our way to ensure we listed how much was state government fees and how much was the dealership pricing.)
(There was an "incident" before my time there, where the web agency fucked up and advertised RAV4s for way below the real price, and half a dozen people worked it out and showed up at dealerships with printouts of the web advertised price and got a RAV4 for a _lot_ below retail price. Toyota ended up making the web agency pay to difference, which was well into 6 figures. But they were getting billed close to 7 figures a month for the website, so...)
I would love such legislation to exist in the States. Netherlands has similar legislation. For a long time it’s why I used airbnb.com.au to search for listings.
It would also neatly solve the extremely annoying problem of tax not being included in the total listing.
I don’t care if it’s “hard” for sellers. There are already existing softwares like TaxJar that help with this. It should be a cost of doing business
I used to get burgers from a nice joint down the way during the pandemic.
They added a 15% fee in, and it’s unavoidable. I called them up and said I wouldn’t be ordering from them anymore as its deceptive cost. Just raise your damned prices!
Was just traveling and the servers kept conveniently forgetting to mention we’d already been assessed an 18% gratuity. It just makes me suspicious of the waitstaff.
I don't mind, even prefer, autograts. As long as they're very clear what's happening. In fact I'll usually tack on a bit extra as long as there's a line to do so. But man, too many places don't draw enough attention to it, particularly servers. And as you say, that latter part is suspicious. Recently we were at an expensive restaurant nearby, when paying I thought it seemed more $$ than I expected but whatever. Double checked the bill when I got home and sure enough I had tipped 25% on top of their 20% autograt. Their tip pool got an extra $100.
It was on the bill, but I missed it. It's not anywhere on their menu, and the server did not mention it at all. That's garbage.
As for all the other fees, I get the point and even sorta agree with them. But again, be up front that they'll be applied and whether or not it should be considered part of the gratuity.
Yeah, doing that stealthily ought to be illegal - and in some places it is. In NYC, mandatory or automatic service charges have to be conspicuously disclosed to consumers before food is ordered, by law. Conspicuously is interpreted accurately enough that merely hiding it on the back of the menu isn’t enough, let alone not disclosing it until the bill at the end of the meal.
And most other restaurant-imposed surcharges on top of listed food and beverage prices, which aren’t bona fide service charges, are categorically forbidden. A mandatory blanket extra percentage that isn’t a bona fide charge for some service, like handling a large party or splitting a bill, is likely illegal in NYC even when labeled as a service charge, although not as rare as it should be. (Taxes can still be added on separately.)
Sadly for the rest of the state and country, these requirements are just local rules and regulations, not state or federal. But some other places do have similar laws.
I was at a burger place in Bangkok recently and when the bill came, every item was shown in Thai and English except the service charge, which was only in Thai (ค่าบริการ).
I thought that was rather sneaky but clever, because the overlap of “people who eat expensive burgers in that area” and “people who tip” and “people who can’t read Thai” probably covers a majority of their customers.
Man, who disagrees with this? I'm not even surprised any more when I take an Uber and I find that there are 7 or 8 surprise fees tacked onto my bill - and I'm not even exaggerating when I say 7 or 8. Same thing when my UberEats bill doubles from the list price, which is a large part of the reason why I try not to use it any more.
This should be made illegal; I can't understand why it hasn't been already.
Doing this risks you being banned by whatever service imposes the fee. Not such a big deal when it’s NoName Vendor, but suddenly being banned from using American Airlines is probably a huge deal for most people
There are no fees for shipping or handling or sales tax buying $100+ in stamps from usps.com Also no fees buying a single book of stamps for $13. Are you sure you are looking at the real government website?
I went for dinner tonight and for some reason they decided to charge an extra pot of gravy at £1 when it always used to be free - this is extremely irritating.
This is not a junk fee. You bought a pot of gravy for £1.
Being nickeled and dimed [1] never feels good, but it's somewhat fair. Why should you pay to check luggage if you're not checking luggage? Why should you pay for two pots of gravy if you only want to eat one?
[1] I realize this expression probably doesn't translate well to speakers of English that use the Pound as their currency. I apologize.
Right, a junk fee in this case would be something more like "dishes/utensils cleaning fee" or something else inherent to the business that is for some reason not included in the price presented to the customer.
If the restraunt previosly did not charge for an extra pot of gravy, but now are, it would be common courtesy to their loyal repeat customers to make certain they are aware of the change when they decide to make it. How to best do that may not be straight forward, though.
The coffee shop added an automatic and mandatory 19% gratuity. I always thought I was only forced to pay 18%!
The buffet this morning did the same thing. The receipt says "18% is gratuity, 1% is for operating costs."
I thought paying for a meal included the operating costs. I'm shocked to find out those were provided for free up to this point, I feel so grateful that the restaurants didn't need to pass these on to me.
And, I'm a little surprised that neither of these two experiences required anything from the servers other than handing me or my kids a drink.
I assume this is because this hotel probably has a lot of tourists from countries where they don't tip. And, I always tip my barista at least 20% but that's because I go to the same place and know them beyond just as a server, and a hotel in Clearwater will never foster that relationship between anyone.
Mandatory gratuity and the "operating cost" charges can be declined unless it is clearly listed and displayed before ordering (and even then it can arguably be declined). This is why you see "mandatory X% gratuity for Y reasons" on menus (e.g. for large groups). If you knew this terrible gratuity beforehand, then you're basically stuck (or can walk away before ordering). However, if they sprung this on you without clear notice, you don't have to pay it.
This comes down to the same reason why when you click "buy" on some website, they can't say "oh look we added a secret X% f** you fee!". Similarly, this is the reason why when you negotiate a rate with a lawyer, accountant, gardener, or other professional, they can't add random fees that weren't discussed. My climbing gym has had big signs up and has sent myriad emails over the past few months leading up to a new credit card processing fee for this very reason.
If you had great service, I would still recommend fighting this and then tipping the server directly with cash. These "mandatory tips" don't go to the server, but are usually pooled and mostly taken by management. If the restaurant is one of the few ones that is equitable between the staff members (e.g. if the tip gets automatically split between front and back of house), then that might be the one exception where paying a surprise mandatory fee would be okay.
from what I understand, and have done sometimes, is that you can opt out of “employee surcharges” “mandates” things that look like pandemic era excuses to charge more
but not the auto-added tip? never challenged those I just dont leave an additional tip or revisit those venues as often
Please file a complaint with the FTC. They need every data point possible. I’ll Venmo you for your time (a coffee ;) if needed (currently sitting in a bar on St Pete Beach).
In the UK, where minimum wage is OK (not great, but OK), and we don’t have those garbage US shenanigans where tipped employees can get paid a pittance, many payment terminals add a 10% tip automatically (especially at bars). Many restaurants also add a 10% tip to the bill (For everyone, not just parties of > 6).
I really wish it were outlawed. The price paid should be the price displayed, unless the circumstances are exceptional. You cannot display prices without VAT so how it is allowed to display prices without the forced tip?
“It’s optional”. Sure, if you enjoy having your food spat in the next time you return.
> those garbage US shenanigans where tipped employees can get paid a pittance
Unless you're in California and some other states where there is "tipped" minimum wage and you get both a full wage and the tips.
And even in other states I got the impression that most (or at least many) waiter and other tipped stuff prefer the current system to getting the minimum wage and barely any tips
I haven’t lived in the US so I can’t really comment on the situation there. But my point is, the US model is infecting other countries which already have minimum wages and don’t suffer from problem tips in the US solve (AKA, insanely low minimum wages in some states for tipped servers).
Why should the minimum wage bartender at Brewdog get an automatic 10% tip when the minimum wage employee at Tesco doesn’t?
> wages and don’t suffer from problem tips in the US solve (AKA, insanely low minimum wages in some states for tipped servers).
Well many waiters earn considerably more than the minimum wage in the US. In large part because of this system. I'm not sure why does the society value their work that much (in relation to most other service workers which is of course unfair). However, essentially what you're advocating is lower wages for some service workers just because the rest are possibly overpaid?
in other countries, server is just a position like any other that has wage competition. a fancy restaurant will try and spend to get the high quality servers it wants.
> essentially what you're advocating is lower wages for some service workers just because the rest are possibly overpaid?
How have you arrived at that conclusion? I am arguing that a) the tip should be included in the price, and b) people should be paid a fair wage by their employer WITHOUT sneaking hidden fees onto customers.
Also, I’ve made it abundantly clear I’m referring to the UK, yet you keep bringing up America. You seem determined to misunderstand me.
Regarding the "tipped minimum" vs. full wage and tips, I've been wondering for a while how this works out in practice, and I've yet to find an answer.
Like do waitresses in California, earning the full $15.50 minimum wage plus tips (and tipping is no less prevalent in California), really end up making 50%+ more money than waitresses in Massachusetts where employers can claim a $8.25 tip credit to cover more than half of the $15 tipped minimum?
You're right, but he's talking about states where tipped employees receive the same minimum wage, paid by the employer, as anyone else plus tips. See my comment / question about how this works out in practice.
[Edited because I find the terminology of "tipped minimum" confusing.]
Who is a "tipped versus non-tipped employee"? I think for servers coming to your table it's actually spelled out in law, for everything else it's a social convention that businesses can try to shove in one direction.
It is a legal distinction. In most places there is a lower minimum wage for tipped employees. The law says what jobs qualify for the tipped minimum.
(Legally, they have to make up the difference if you didn't make enough in tips. But most servers make more than that via tips, which is why they often fight efforts to eliminate tipping.)
Also, wage theft is one of the most common things that happens to restaurant workers, because a lot of employers try to avoid making up the difference.
Some of us are starting to wake up and open our eyes though.
I've personally stopped tipping in most places I go to. I might leave 10% at a high-end restaurant with really good service, but in general I leave a very minimal tip at sit-down restaurants, and pretty much never leave any tip for any sort of takeout/counter service.
I know the wait staff see that and think I'm an asshole, and I don't care. I'm fine with being an asshole to avoid getting fleeced, and I've not yet had any issues with service, even on return visits.
I think we all agree that tipping sucks, but it’s the world we live in (in the US at least). Wantonly refusing to tip waitstaff just means you’re Mr. Pink,[1] and I don’t think anyone wants to be Mr. Pink.
Where I live, waitstaff are paid the same minimum wage as every other worker, there's no tipped vs non-tipped dichotomy here. The way I see it, if all you did as waitstaff for me, was bring me glass of water, take my order using your tablet where you just tapped a few buttons, and then finally brought out the plate of food...I don't see how that deserves much consideration.
Sure, if I go to a nice restaurant, and the waiter chats me up, figures out what I like, suggests some dishes, does some non-standard stuff to make my experience at the restaurant memorable -- I will tip that. But if all you're doing as a waiter in my locale is tapping a few buttons on your POS handheld and then later bringing over a couple of plates, I don't see that as being worth much of a tip.
Czechs think so, too. Rounding up to the closest convenient monetary value is fine (like 50 CZK from 47), but the US rules could as well be from another planet.
Everybody I know who visited the US was bewildered.
Some people in Russia insist on tipping. They usually do it by leaving a 50 or 100-ruble note in the bill folder thing even if they paid by card. There's never any provision to tip with card in one go like in the US, it's always an extra, strictly optional step.
Some places where you pay at the counter would have a tip jar, or even a small electronic device you tap your card on to tip a fixed amount. These are ignored by most people.
As much as I like the advent of things like square and toast to provide convenient checkout, they've added a lot of tipping in places where it wasn't as common. There are all sorts of things I buy now where I get that little electronic checkout screen and options for 18/20/22/25% tipping. When before there *may* have been a tip jar. If that.
The weirdest part of this for me (not American) is that my local daily coffee shop throws in free items for me - sometimes comps the coffee or gives banana bread or something to reward a frequent customer. The idea that a frequent customer feels like they need to tip extra as the OP says blows my mind.
Free comps are psychology (more likely classical conditioning). It is the same psychological quirk which makes gambling so appealing. When training dogs, treats work far better when you randomly “jackpot” the reward. The lizard brain is willing to grind out the low paying rewards longer in hopes of the next high paying reward.
Sure, my point is it's the OPPOSITE of feeling like I should tip/tip extra as a regular as OP said. My overall costs are lower as a regular which makes sense.
Well yeah, but I think point being made here is it is shop that feels rewarding customer and not the customer that is socially forced to reward server at coffee shop counter every single time.
Most people seem not to tip baristas at all. I make my own coffee 99% of the time, so on the few days per year when I buy it, I tip around 20% because it's a luxury, and if everyone who could easily afford the extra few dollars did so, baristas might actually have fair income. Same for eating at restaurants, etc.
I acknowledge that it's a workaround for a larger problem, but I have low confidence that the US will actually address that problem within my lifetime.
If they're not earning a fair income, then their wage/salary should be increased. It's ridiculous to make their pay vary from day to day depending on how guilty their customers feel.
If their employer raised their rates 10% they could increase the wages of all low wage front line employees by 1/3. Instead in general we see prices going up in some cases several times actual inflation and wages that at best track it.
The nice things about tips is that it adds voluntary price discrimination. If you want to pay more you can. A raised price on the other hand raises a price floor which may disuade customers who are more cost sensitive.
It’s interesting because the origin of tipping in the US came about during the post civil war period, when black people needed jobs but nobody wanted to pay them because you know they had been doing it for free just a short while ago. The expectation was that the guest would pay them, not the employer. I guess we still have that mindset.
These fees seem to be particularly prevalent in the travel and entertainment industries. I stayed at a hotel in NYC relatively recently, and I booked and pre-paid through hotels.com. When I arrived, the hotel sprung me with a $50/night "resort fee", which was apparently required to stay at the hotel (though I am sure they would tell regulators that it's optional).
I also don't understand the US practice of not including relevant sales tax charges in the cost of a good. I know that many US states operate a sales tax (which seems like a bad idea as opposed to a VAT or similar system).
I don't mind having actually optional extras be charged separately, but if they aren't really optional (like a service fee), it should be part of the price.
I'd be very interested if someone has a link to the text of what is actually being proposed.
Wow. I actually always assumed that the "resort fee" was to cover a hotel-specific tax, but I see that you're right.[1] Seems like a textbook case of manipulative business practices to me. I already felt like the anti-junk-fee law(s) couldn't be passed soon enough, but even more so now.
> I also don't understand the US practice of not including relevant sales tax charges in the cost of a good.
Sales taxes in general are a horrible can of worms, and IMO every area should migrate to income tax exclusively.
Indirect taxes (sales taxes, GST, and VAT) are more efficient than income taxes, both from a compliance perspective and a fairness perspective.
Compliance-wise, it's easiest to calculate and collect the tax on economic activity when an economic transaction occurs. From a fairness perspective, it's clear when an indirect tax applies; with income taxes you need a convoluted code to address the many types of income possible in a modern society.
> with income taxes you need a convoluted code to address the many types of income possible in a modern society.
Do you? You could tax all income the same way, but governments seem to like having the ability to use the tax code to incentivize certain ways of making money over others.
You're hand waving away what the same way means. What if I make 500k once every five years? Should I pay taxes like I make 500k every year once, and nothing the other 4 years? Should I be able to amortize that across 5 years?
What if I bought a house and flipped it as a business venture? What costs count toward the business and what doesn't? You have to define all of that before you know what you've earned.
Income is complicated, whereas a single transaction is very simple.
Yes, and this can easily be accounted for by not taxing necessities (or taxing them at the lowest rate), which is what most of the U.S. and EU already do.
"Luxury" items and other goods are subject to higher tax rates. Educational items are treated as their own category of goods in many places. Alcohol is often broken out from the luxury category and taxed at an even higher rate. Some places tax sports events but not cultural events.
And those are all things that are very easy to do at the time-of-transaction because all of the necessary information is available and the calculation is trivial.
This is a solved problem, with different VAT rates. For instance in France there's a 2% rate for crucial things like medicine and some foods, 5% for other important things like electricity, 10% regular reduced rate and 20% for everything else. You can therefore easily target by saying this category of goods gets this VAT rate. E.g. jewelry being at 20% will only impact well off buyers.
I would hardly call it "solved". For the examples given:
>medicine
Semaglutide is a weight loss treatment that costs $10+k a year. It is ostensibly a luxury for the well-off. Does it fall under the 2% rate for medicine?
>and some foods
How is that determined? For instance, Parmigiano Reggiano DOP aged 48 months is arguably a luxury, but generic parmesan cheese isn't. Even if you could draw a line somewhere between the two, it's hardly trivial to do this for good ever. You either have to accept some absurd situations like the above, or have a sprawling bureaucracy tasked with determining what's a "luxury" or not.
> E.g. jewelry being at 20% will only impact well off buyers.
And what of a poor couple that's getting married? I agree such a tax might be approximate progressive (ie. on average the top 20% pays a higher tax than the bottom 20%), but it leaves much to be desired from a "fairness" perspective. A multi-millionaire driving a Corolla gets taxed more than some army recruit that just blew their signing bonus on a BMW. You also can't implement higher brackets on higher earning individuals as easily. How do you tax the likes of Bezos? It's not like they buy 100x more luxury items because they make 100x more. Most of their money is spent on investments, not consumption.
Your argument is based on ignorance of how sales tax/VAT codes work. Believe it or not, but tax people and businesses have been dealing with these issues for over a century now and they've mostly figured it out.
It is ostensibly a luxury for the well-off.
No, even for the well-off it is still a medicine.
Parmigiano Reggiano DOP aged 48 months is arguably a luxury, but generic parmesan cheese isn't.
In places where it matters, the sales tax codes can get as granular as they need to address this. They don't need a dedicated bureaucracy to make these determinations: it's either handled by the legislature or a very small team, since determinations like this are infrequent and don't require dedicated staff.
In this particular case: both DOP and regular generic parmesan are classified as foodstuffs by CA and neither would be subject to sales tax.
but it leaves much to be desired from a "fairness" perspective
Someone buying a budget car should be taxed less than someone buying a luxury car, regardless of the wealth or income of either buyer.
It's not like they buy 100x more luxury items because they make 100x more. Most of their money is spent on investments, not consumption.
Indirect taxes are not consumption taxes. They are transaction taxes, and investment transactions can be taxed under a sales tax, GST, or VAT regime. Some jurisdictions do tax investment transactions. In the U.S., taxing investment transactions has been proposed many many times over the past few decades. Wall Street have managed to beat off that proposal through profligate lobbying but every time the proposal pops up it gets more support...
> Semaglutide is a weight loss treatment that costs $10+k a year. It is ostensibly a luxury for the well-off. Does it fall under the 2% rate for medicine?
Trivially resolved. In France only medicine which can be reimbursed by social security (so only actual things that can be prescribed and work, not optional luxury or homeopathy crap).
> Parmigiano Reggiano DOP aged 48 months is arguably a luxury
In France I doubt there's any differentiation of fancy vs non-fancy versions of foods, let alone cheeses. It'd be insulting to the nation to contemplate such a thing.
> And what of a poor couple that's getting married
I didn't know jewellery was a prerequisite to getting married.
>(so only actual things that can be prescribed and work, not optional luxury or homeopathy crap).
I'm not sure what you're trying to say. Semaglutide has been approved (ie. has proven to work) for the treatment of obesity.
>In France I doubt there's any differentiation of fancy vs non-fancy versions of foods, let alone cheeses. It'd be insulting to the nation to contemplate such a thing.
Do you know this for a fact or just simply guessing? I find it very unlikely that France (or any other free market economy) doesn't practice product segmentation for foods.
>I didn't know jewellery was a prerequisite to getting married.
But poor and middle class people buy "luxury" stuff as well. When that happens, how is it fair that they're getting taxed the same as Bezos buying a mega-yach?
I assume it hit the same way my last stay in Vegas worked. I booked and prepaid through a travel site. The travel site made very clear that the hotel would be charging me a resort fee separately. The travel site was unable to collect this fee at my time of payment. When I checked in, they charged me the separate fee.
I knew about it and expected it because Vegas but it still felt slimy.
Oh for sure, I think it's stupid - and I hope that the Government is able to roll out the new rules because mandatory fees should just be part of the stay rate.
> I also don't understand the US practice of not including relevant sales tax charges in the cost of a good.
The idea is that if it's just baked into the price, customers will ignore it but if it's applied separately customers will consciously recognize the amount of money the government is taking from them and presumably apply pressure not to increase that amount.
When traveling cross country years ago with 3 cats I booked a budget at a fleabag motel for like 70 bucks based on part on it being listed as accepting pets. They tried to charge 50 bucks a head non-refundable for the felines then disclaim responsibility for listing these costs because the third party ran the ad.
> I stayed at a hotel in NYC relatively recently, and I booked and pre-paid through hotels.com. When I arrived, the hotel sprung me with a $50/night "resort fee", which was apparently required to stay at the hotel (though I am sure they would tell regulators that it's optional).
The king of those is Las Vegas. I have literally removed Las Vegas as the possible destination for trips before when I remembered their resort fee bullshit and got pissed off. I don't know how those things are even legal, other than the government gets their cut too so screw visitors.
Sales Tax is an indirect tax on consumption that is deferred until the end consumer makes a purchased, and taxed in the area they made the purchase (even online since 2018). Some end consumers are tax exempt and can avoid paying Sales Tax. Companies can write off taxes paid where appropriate. Everyone else in the value chain is tax exempt assuming they filed their paperwork correctly. Ultimately this means that there is no equivalent to a VAT recovery, reverse charing, etc, and the governments that collect sales tax don't see any money if something is never sold.
Sales tax is not included in the price because it is based on the price. If a widget is sold for $10 today, there is less tax paid if you sell that widget for $1 tomorrow. It doesn't matter if $9 of additional value was created along the way.
States, counties, and cities can have different sales tax rates for various reasons. For example, my city voted to add to the sales tax to pay for road improvements. There is a lot of travel into our area for consumption so it ends up that visitors pay for roads even if they don't refuel their cars in the city.
Sales Tax and VAT are not bad ideas, they're just different ideas. At the end of the day if your government wants a Dollar, a Pound, or a Euro, they'll find a way to raise it.
Regardless of the distinction between sales tax and VAT, if any given US state wanted to have the state sales tax be included in the price that is shown to the end-user (at least in physical stores that exist in that state), I don't think there's any federal law preventing them from doing so. In other words, rather than having the store list a pack of gum for $1.00 and then charging me $1.06 at the register, the state could just require that the store list the pack of gum at $1.06. If that means the price of a can of Arizona Tea has to vary by, like, two cents when you cross state lines, that's a worthwhile tradeoff.
Sales Tax rates vary by the address and don’t apply to some goods/services. Additionally, some states have holidays (like “back to school no sales tax days”).
That is to say that the retailer needs the recipient’s address before shopping, rather than after. Also, if sales tax is handled by an external API call, those costs would increase drastically if the same call must be made for each product listing price, as opposed to just a few at the end of checkout flow.
The bajillion-jurisdictions problem can be solved on an aggregate basis.
Charge everyone $100 inclusive-of-taxes. Keep $93.50 of that from a customer in Phoenix, $92.75 from a customer in Los Angeles, and all $100 from a customer in Oregon. If you have approximate knowledge of how your demand breaks down, you could come up with an all-inclusive price that produces the average bottom-line revenue you want.
You seem to be hand-waving away the accounting part and the fact that the subtotals for the same goods will be different for users in different cities.
Thank you for clearing that up - I was under the mistaken impression that most goods were subject to sales tax in the US, even in b2b transactions. I was not aware that most entities other than individual people were tax exempt. That makes the end result a lot more similar to VAT than I thought it was (though with a different way of getting there).
Given all that, why would we use a VAT system rather than sales tax? So that the revenue is more evenly spread across the lifetime of a good or service?
It's funny because I think both you and GP answered it? If the end result is almost the same, then... the reasons why one or the other is... Almost none really?
Or to put it another way, for historical reasons?
(I'm playing AC Unity right now... Set in Paris during the French Revolution... And you know what the contemporary city walls were used for? Tax collection purposes...)
This kind of stuff should be settled in trade agreements IMHO...
Which made me think about a future EU-US trade agreement... But guess what? Fucking Trump torpioed it.
> When I arrived, the hotel sprung me with a $50/night "resort fee"
If you voice your objection, follow up in writing, and have a decent credit card, you can almost certainly get it charged back. Because the hotel is not going to say, in writing, it isn’t optional. (You may not be welcome back.)
Most if not all hotel/casinos I've stayed at in Vegas and Atlantic city have added a mandatory "resort fee" for many years, and will happily tell you to go pound sound if you try to argue about it!
Not including sales tax kind of makes sense, because it varies so much state to state (and often within the state). This allows companies to advertise one price nationwide.
When was the last time we found same hotel prices across states or counties? Oh it is 300$ plus tax in new York and it is 300 inclusive in Philly but ... I am not going to Philly. McDonald's maybe but not a hotel since so much depends on the location and amenities.
Some cities range across counties. Some cities have taxes that the county itself doesn't, so literally crossing the street into the unincorporated part of town can save you on sales tax. Sometimes sales tax is suspended based on who you are. Sometimes sales tax is suspended on what time of year it is.
Sales tax is complicated. I get why companies would rather outsource that to the register to look up at the end.
It's usually because they don't allow localities to add sales taxes. Here in Japan, sales tax is 10%, everywhere (except for groceries, which is 8%). You don't have to worry about an extra 0.5% from some municipality; it's the same everywhere.
The US gives way too much control to local governments.
Surely your inventory/POS systems need to know what price/tax rates to charge anyway. I understand your point in the context of an ad in a magazine offering a good at a particular price, but I don't think it makes sense at all in the context of a store with tickets on items that don't actually correspond to the price at the till.
You could set the same price, and then your actual revenue would vary state-to-state.
European companies sometimes have a "No VAT" promotion, which of course doesn't actually mean "No VAT", merely that prices are reduced by what VAT usually is.
Does having different levels of tax between states, and between municipalities within those states, actually benefit the public?
I just don’t see how this is better than literally every other country in the world which sets sales tax at the federal level.
And please don’t hit me with ridiculous hypotheticals “if it’s set at the federal level, the government could just increase the tax to 7000 billion trillion percent to steal everyone’s money”.
It's because the feds actually don't have any sales tax. Sales tax is set at State level (unless you live in Alaska, Delaware, Montana, New Hampshire or Oregon).
Then the County you live in can levy a sales tax. This is to serve the people who live in unincorporated places.
Lastly, Cities levy a sales tax.
So yea, it really isn't that simple in the USA.
Hell, how many countries do you know that have different income taxes based on where they live?
It isn’t that simple in the USA. Yet it literally is that simple in every other country in the world.
I don’t understand why the average American has such main character syndrome that they genuinely believe their country is so unique that they are unable to solve problems every other country in the world has solved. Ridiculous.
Do you understand what USA means? United States, it is a union of independent states. It's like you asking why all countries in the European Union doesn't have the same taxes or why all countries in Africa don't have the same taxes.
Canada has a federal tax but in some provinces it is combined with the provincial sales tax and in other provinces there is a separate tax (or none in Alberta) so the USA is not the only federation with disparate tax regimes.
Many countries do not, in fact, have lower-level sovereignties with general powers with selective negative limits and a top level sovereign with limited, positive powers.
Very many countries are more like many US states are with their subordinate counties: that is, a top level sovereign with general powers and negative limits with subordinate non-sovereign entities with limited positive powers granted by the top-level sovereigns.
> The United Kingdom, which unlike the United States is quite literally comprised of different countries
"State" is the usual legal term for sovereign juridical entities with territory, while "country" is a less formal term that often corresponds to a state.
(And the "countries" that make up the UK aren't sovereign even in theory, though
some of them have some degree of home rule granted by the central sovereign.)
> the USA is not in some crazy unique position
Unique? No.
But common? Also no.
And it structurally does make solving some problems quite hard, and it makes changing the structure to resolve those problems also hard.
> Almost all countries in the world have states or an analogy to states.
Only 27 countries in the world are federal states, which is a very far cry from "almost all countries." The entire notion of a federal state is that both the federal government and the state government have independent loci of powers, and there are times when the state governments can tell the federal government to fuck off if the federal government wants it to do something. The exact degree to which this is possible varies from country to country.
For example, you seem to be comparing the US to the UK. But Scotland is not like a US state--it has far fewer powers than a US state, and what powers it does have is entirely dependent on what the UK parliament is willing to grant it. So trying to draw an analogue between a US state and a partially-devolved country within the UK is itself a mistake.
All the largest nations in the world are federations: Russia, Canada, United States, Brazil, Australia. You have to understand history and realpolitik.
German VAT is also not simple. Before we had a temporary (so another layer of madness) law change, you either paid 19% VAT or 7% VAT, depending on whether you ordered your food to go or sat down at a restaurant. So the same item, for the same person would be taxed at a different rate depending on whether that person walks out with the food or carries it to a table. The restaurants simply advertise a single price and eat the difference [1]. Or to be more precise: the different tax values are priced into the single price, potentially accounting for the rough split between dine-in/takeout orders.
Despite all of this madness, we see a single price at the menu, we can pay exactly that price, and for takeout it actually is not uncommon to actually pay exactly that price. No sales tax, mandatory surcharges or gratuity, just a single, final price.
As for differences in the income needs of the counties/municipalities: this is handled with taxes on the profit of companies based in that area [2]. So the consumer never sees the differences in taxes, accounting is pushed to companies. If McD wants to advertise a fixed price nationwide, their franchisees need to eat the difference.
I get that in the US the states are more like countries in the EU, but we still manage to have the same VAT in all of Germany while apparently US sales tax can vary on the city level.
[1] there are exceptions, e.g. explicit to-go foods are advertised as such
[2] there are more ways for this, but this is, IMO, the most similar way to the local sales tax in the US
So using your logic, in almost every other country in the world where sales tax is set at the federal level, states/counties/equivilant/cities don’t get tax money.
Do you genuinely believe this, have you done any research, and are you happy to stick with this argument?
It can also vary street to street, due to intersecting county and municipal lines, and based on time, e.g. tax brackets that change depending on sales volume or special taxes on certain items.
Still, every one of those stores knows exactly, down to the penny, what to charge me when I checkout. This isn't rocket science. Stores just won't do it unless forced to because if I put taxes in my prices, the store down the street won't and will "look" cheaper.
> every one of those stores knows exactly, down to the penny, what to charge me when I checkout
The resounding misunderstanding is their customers don’t care. I didn’t notice all-inclusive prices until a German friend pointed it out to me. I grew up, in part, in Europe!
Also, no, they may not. Not before you buy. Some counties in America vary their taxes marginally. That means your tax rate on some product today could be different from tomorrow, based on that store’s sales.
I also don’t hate the side effect that it somewhat points out to you that it’s the govt taking a cut
It sure is nice in most of the rest of the developed world to buy a product or service and immediately know how many dollars have to go from me to them because it’s the one price, though.
> I also don’t hate the side effect that it somewhat points out to you that it’s the govt taking a cut
In every place I have been to, the receipt or invoice has a line item saying how much tax was payable on the transaction. Not least so that business customers can reclaim VAT in countries that have VAT. Different items also often have different tax rates, which is especially noticeable at somewhere like a supermarket where you might buy food, other goods, and alcohol in one transaction.
Sure, of course it does. How often do you look at it, and think through what portion is actually going to the business? Tax-not-included prices do that automatically.
> I also don't understand the US practice of not including relevant sales tax charges in the cost of a good.
Here in Canada too, but I don't mind. When I feel the pain in my wallet, I want to know where to direct my bitterness. Credit card processing fees should be broken out too IMO.
I'm currently 60 minutes in, waiting on hold for American Airlines support, because I clicked on the cancel flight button on my trip details page hoping to get a warning page with details of my cancellation options, but instead it just canceled it on the spot with no refund/credit. I've never seen this before from any other airlines, nor any other products that cost thousands of dollars.
For some reason they also have no other way to reach support other than phone.
Wow. I’m very careful with clicking Cancel/Modify buttons for this reason. Never actually thought it would happen. Now I feel my paranoia has paid off.
> the US will also need sales taxes included in the advertised price
This is totally separate from junk fees, which are controlled by the seller.
Sales tax exclusive is a common complaint from visiting Europeans. It is seldom an issue for Americans because most aren’t paying with exact change or calculating budgets to the penny. Go to low-income neighbourhoods, where incomes are closer to those in Europe, and you’ll find tax-inclusive pricing.
> Go to low-income neighbourhoods, where incomes are closer to those in Europe, and you’ll find tax-inclusive pricing
This is a pretty funny but largely ignorant dig at Europeans.
Every country I've ever been to except the US includes VAT in their prices and I've been to over 30. It's not just a European thing but a world thing, where the US once again is the odd one out.
> It's not just a European thing but a world thing, where the US once again is the odd one out
I agree. That doesn’t make it an issue.
It also doesn’t negate that the U.S. is the odd one out on (a) income and (b) local government. Those are the factors, together with less cash use (though this bucket is less exclusive), behind the phenomenon. My life would literally not change in any tangible way for having keeping menus and price stickers up to date; if another store gave me better service for forgoing that work, I’d probably notice that first.
Put another way: I’ve travelled a lot in the world, and I genuinely hadn’t noticed tax-inclusive pricing until a German friend pointed it out in Frankfurt.
> you'll find many small countries with similar incomes, less cash use and more transparent pricing
How many tax regimes do they contain within themselves on account of local governments?
I’m not saying America can’t do it. I’m saying we don’t care to. This is literally a non-issue for most Americans. I understand the aesthetic preference. But it’s such a strange hill to die on.
> Transparent pricing is a fundamental necessity for the free market
Transparent pricing doesn’t mean pricing with no math.
Junk fees, on the other hand, are not transparent and not set by the state. (Though I haven’t yet seen the business lobby try to distract by shifting the debate to tax-inclusive pricing, which would be admittedly clever.)
> I genuinely hadn’t noticed tax-inclusive pricing until a German friend pointed it out in Frankfurt.
Well, you’re not used to being able to rely on prices being accurate. Surely if you’re used to accurate prices you might be paying more attention if suddenly they’re no longer correct.
A country with an interesting VAT/sales tax is Thailand, where large shops and chains and places in malls will add tax to the final price (and service charge sometimes) while smaller places will not. (I’m talking restaurants, VAT is included in online stores and I’m pretty sure for physical goods.)
I think this is because of the minimum turnover for VAT[0] at least on paper, but there are places obviously making a lot more that just don’t bother with it, so there is probably a lot of adventurous accounting as well.
> Every country I've ever been to except the US includes VAT in their prices and I've been to over 30. It's not just a European thing but a world thing, where the US once again is the odd one out.
Only for local purchases, at least in Europe. In fact for non-local purchases, the US is much simpler.
I am, right now, in Italy, ordering an item from Germany, and it priced at N euros "plus 19% VAT". Because receiving countries differ in amount of VAT, vendors outside those countries cannot include it in their prices.
But it's "0% VAT" shipping to US -- that is, the primary country where you pay the vendor exactly what's stated is the US.
Well the shop you're ordering from is crap. Many of the shops I order from calculate vat based on where you ship to. So what you see is what you pay. I think even if the advertise the wrong VAT you still pay what is on the sticker. How is that not better than having to always add some value yourself whose percentage differs based on where you are atm?
> Many of the shops I order from calculate vat based on where you ship to
This is a good illustration of valid trade offs between two cultures. I find it absurd to have to enter my address before even being shown pricing (let alone deciding to purchase). You, on the other hand, prefer all-in pricing.
These are both reasonable takes! They’re just different.
But you don't have to put in your address, just your country. For many websites you likely have to do that anyway because you might not speak the default language.
Moreover, most of the websites change the location based on IP addresses anyway.
> you don't have to put in your address, just your country
In America, you would. Various municipal and county lines can create separate sales tax obligations based on address. Even barring that, I would find it intrusive and absurd for someone to demand my state of residence prior to even being shown price. (My IP address only loosely correlates with my residence.)
But again, that’s a preference. One most Americans share. Multiple equilibria.
You keep saying it's a preference. It's not my preference but it's become something I've been conditioned to accept like not being able to know what a medical procedure will cost until after I get the bill. That doesn't make it preferable nor desirable.
That is a completely bogus comparison. You can easily determine the total cost inclusive of sales tax yourself, and you almost certainly know your own local tax rate already. You cannot determine the cost of a medical procedure ahead of time no matter what you do, even to within an order of magnitude.
Until the recent explosion on direct online shopping from China, you, the importer, were responsible for collecting import duties/VAT. To avoid tax evasion the customs authorities started requiring import duties to be paid in advance.
The US is one of the counties where the value that is duty free is high, and as I understand it, there’s no tax collection in advance. Most/all purchases will be 0% tax from the vendor side, but you are still responsible for assessing and collecting this tax yourself.
> Sales tax exclusive is a common complaint from visiting Europeans. It is seldom an issue for Americans because most aren’t paying with exact change or calculating budgets to the penny.
I know it's true -- when I loved in SF the fact that I couldn't tell what things cost just made me give up looking at the price altogether :)
I just picked things in safeway and payed without even listening to what the amount charged was...
But it's probably a bad idea to encourage this kind of behavior.
If you want the free market to work, you'll need engaged customers who at-least reads the price tag.
> know it's true -- when I loved in SF the fact that I couldn't tell what things cost just made me give up looking at the price altogether :) I just picked things in safeway and payed without even listening to what the amount charged was...
I'm sorry that it's so hard for you to multiply by 1.1
09:00 - you're in Santa Fe, NM. What's the sales tax rate? OK, good, you've figured it out.
12:00 - after a delightful morning checking out the history of genocide in North America, you decide to drive the Turquoise Trail (NM14), a national scenic byway, south to Albuquerque. You stop to wander and eat lunch in Madrid, NM. What's the sales tax rate? Wrong, you're no longer in the city of Santa Fe, but Santa Fe county.
17:00 - you arrive in Albuquerque and go to buy something at a regular store. What's the sales tax rate? Ah, now you're getting it: you don't know, because now you're in Bernalillo County, NM.
Indeed, state and local sales tax in the US is complex.
There are around 15-20 different tax rates in my metro area, between state, regional (multiple county metropolitan council), county, and city specific taxes.
From the central city area, you can reach all of the 15-20 different sales tax rate areas within 30-45 minutes.
Fine. You can list the price in an ad before tax, so long as you make that VERY clear. There is no excuse for not listing the all-in price on the shelf or tag in the store. The person who completes my transaction will be charging me the exact amount of tax, so the value is known. Taxes don't change very often. Usually years go by and there will be months of notice before they do change.
As a foreigner, I just multiply everything by 1.1, so I know the average upper limit on what I’m buying.
If the sales tax rate ends being less than 10%, it’s money saved. If it ends up being more than 10%, that would be my new multiplier that I’d use as baseline.
Well, yeah, when traveling you kind of have to do that especially since it's unlikely you know the exact exchange rate at that moment. It would quickly become unacceptable to live that way every day of your life unless you are particularly insensitive to price.
The entire range of places you listed differ by slightly more than one percent in tax rate.
If you’re that price sensitive, you can probably save a lot more money by just visiting five to ten stores to comparison shop for every item since you can likely save far more than one percent that way.
Or just fork over the extra penny per dollar when you visit Santa Fe the city
You estimate at 1.1x and you'll be good, especially if paying by card. Unless you're literally penny pinching, you don't even notice paying 8.75% vs 8.85% or whatever. But if you really just want to hate the US, I can't stop you.
Yeah it’s super annoying when companies have a “taxes and fees” section that contains mandatory taxes alongside fees that they decide to impose. Uber and DoorDash come to mind.
Some of the jurisdictions I have businesses in require all taxes to be shown on the receipt, and individually. We have to show 4 different taxes for each night of a hotel stay, that is 5 lines of charged breaking down the cost of a hotel room might. A week long stay is a multiple page receipt.
My ATT receipt for my mobile phone shows 8 different state and city and county taxes, from general sales tax to 911 specific ones to mental healthcare tax.
Zero reason for all this to be broken down for the end customer.
I want to know if it could be less but for "fees", and there should be a mandatory amount of transparency in all pricing. Opaque pricing is anti-customer.
I especially love it when business types tell me what I should be caring about with regards to my money.
We can take this even further and demand cost-plus pricing for all things (with a regulated and controlled definition of 'cost'). This idea that pricing should scale to the customers' means needs to die. Good business means leaving money on the table, sometimes lots of it.
That would be a ridiculous overreach of government, not to mention a political disaster.
> with a regulated and controlled definition of 'cost’
Perhaps we can start with a breakdown of your quality of life and come up with what is and is not necessary.
I can start by suggesting getting rid of your detached single family house, greater than 3 liter engine car, restrict eating out to once per quarter, and foregoing vacations involving flights. And that would still be better than how the majority of people in the world live.
Obviously, I mean that as a rhetorical device to show the futility in trying to define what costs are and are not acceptable. The market is capable of figuring that out. The businesses that have the better price will have the appropriate costs.
Of course it would. Capitalists scurry when sunlight is shined on them, much like cockroaches.
People are not businesses, we do not exist to generate money for shareholders. The logic does not apply. Quite the opposite: business serves customers, and an expectation of servant leadership should apply here.
When I feel a price is unreasonable, I want to know whom to complain to. If the taxes are what's making it unreasonable, I want to know to complain to the government rather than the merchant.
Broken down or not, I want to know that my $75 phone bill will be $75 and not $87.62. Prepaid phone services manage this just fine, so it isn't difficult.
It's fine to break them down on the invoice if they prefer/must. But the listed price should still be the final price inclusive of all mandatory fees.
When I buy something here in Europe it will say €2 on the sticker, and then my receipt will say that the price was €1.66 with a VAT of €0.34 for a total of €2.
After overdraft fees, probably the most egregious abuse of fees I’ve seen is being forced to pay an “online course fee” on top of university tuition. It made sense when online education was in its infancy, but these days it’s much, much cheaper to deliver online courses - less instructor time, more “scalable”, and less need for large lecture halls. Not to mention that many professors don’t even bother to record any lectures and the assignments are often graded by TAs. So we’re paying you $1,500+ a course plus fees for... what, exactly?
Anyway, are universities covered by these policies as well?
It seems like any fast food moves to some sort of ipad-based cash register deal, they all ask for a gratuity if it's a burger or a coffee as though it's built-in and expected. I know no one is getting a tip in those places that I don't put cash into their pocket, and they'd probably be fired if they did for stealing. It's usually the first and last time I go to them as I feel weird them even asking me for fast food.
No one asks for a tip at my preferred dirty old fast food spot of choice still using a cash register from the 80's.
As a result, I mostly never eat out anymore, fast food or otherwise with costs gone absurd with or without tips. Let the fools that tip 20% for their coffee keep murica great.
Seems like lobbying groups don't have a good argument for this. The argument I'd always heard was "shady businesses started having these resort fees or fees for choosing your seat, etc, and we needed to do similar or else they'd each our lunch when folks compare prices". If the government is suggesting banning the shady fees, then we're back to a level playing field, no?
There are obviously more important things, but when visiting one of the most annoying parts of the US is it is impossible to know what something actually costs. With taxes and fees and gratuities (optional or automatic) it feels like I just have no idea what the relationship between the sticker and the actual cost is.
I guess a nice counter would be sticking with cash and saying "I am buying this because the sticker says $19.99 and I got a $20 bill in my pocket, so I'm going to assume I can buy it, right?"
I mean, that's silly I know. But in more seriousness, I feel all that BS of extra hidden prices gets worse when everything becomes just a slightly-higher number that the clerk types on a pad when you're paying with card.
>The fees together may cost Americans at least $64 billion annually, according to a rough White House estimate, underscoring its efforts to deliver financial relief to families grappling with high prices.
At ~$190/person, that honestly strikes me as low. A single last-second convenience fee to an entertainment venue can be tens of dollars. Monthly, it feels like almost every service I use has an unstated fee above and beyond the quoted sticker price.
I’d guess that something like 80% of fees are shouldered by 20% of folks (or maybe 60/40, 70/30). The bottom quarter to half of Americans probably don’t have large entertainment and travel budgets.
This is a classic example of market failure. Consumers will choose the lowest rates—all else being equal—and this leads to artificially low prices.
What I don’t understand is whether doing this really protects their profits. If everyone does it, then it’s a race to the bottom anyway. Is it during this “transition period” where profits are made?
And if everyone in the US does it, then the natural outcome is for everyone and anyone to avoid doing any business or travel in the US.
Tweaking and twiddling with pricing structure... It's just what happens in a mature market.
Every year, you need new ideas to make business better. This is something that you can usually futz with, and maybe get a little bit of bang.
It's not necessarily about pricing template being better universally.
It's just that these are factors you can move around, "optimize."
Having multiple levers is just helpful.
This is also an orthodox negotiation model. It's always helpful to negotiate multiple items simultaneously. Salary, benefits separately, pension separately from that, days off, personal days etc.
It's very common that one is a hard no, but others are not.
I know it seems to make sense to transparently aggregate everything.. but... The phenomenon exists regardless.
I think in many cases, companies want to keep it because it makes comparison-shopping by price more difficult. There may also be some psychological trickery wherein customers are more likely to accept a higher price after they've started the purchase process.
> There may also be some psychological trickery wherein customers are more likely to accept a higher price after they've started the purchase process.
At least for me, I get very incensed when merchants pull those tricks on me, to the point that I abandon carts on the last stage and start comparing prices everywhere else.
Price changed at the last minute? The seller is being dishonest.
You can't blame the provider. Eg if you were the only hotel in town without the fee and your rate is higher than everyone else you'll likely be empty. I'm sure most hotels are only too happy if everyone is banned and the playing field is flat.
What got me recently was the fee to select a seat on a flight. I'm traveling with my family, including a 12 yo kid. Am I going to let her sit between two strange men for the flight? Of course not! So I have no choice but to pay the $50/seat (or whatever the amount was) so we can all sit together. This is criminal! Who will be held responsible if my kid gets assaulted in the flight?
This leads to another awful behavior. Have seen too many instances, including by friends of mine, where instead of paying the uncharge they let the airline assign seats. And then they put up a fuss when people won't swap seats with them when they board. What's worse, often the flight attendants will side with these people.
As someone who always pays extra to choose my seat, no. It is not my problem if people can't be bothered to do the same thing.
Don't even start me on Southwest, where a bunch of people will fill up window, aisle, down the plane, so good luck to you if you board later with two or more in your party.
That's been Southwest's business model for 40 years or more. It's not a secret and they do allow you to pay extra to board first. Otherwise, you need to check-in right when it opens. If that isn't acceptable to you there are other airlines.
> Otherwise, you need to check-in right when it opens.
Does that always work? I flew on Southwest a few times recently, and by the last one, I learned to check in right when it opened 24 hours before, and I still ended up in groups B and C on the 2 legs.
It almost always used to, but in the last year or so it’s been much less reliable for me.
I think it’s probably a mix of more people having status because of COVID causing the airlines to extend their rewards periods and then more people deciding to pay the $25 ish to not have to deal with checking in on time.
The upside of this is that you save $50 on your flight if you're willing to sit alone in a middle seat, thus making air travel more accessible to more people. $50 means a lot to some people.
It's really all about how you perceive this. You see it as a hidden cost, others see it as a discount.
The problem is that the person that a kid gets put next to isn’t a babysitter, and shouldn’t have to be one.
I don’t want to have to explain to a kid that they need to put their phone in silent or use headphones, I don’t want to have to keep them from kicking the seat in front of them, etc.
The reality is that there is a base level of decency that should exist. That includes not splitting up children from their guardians.
If you want to charge people for picking their seats, fine. Charging parents to not be separated from their kids is just plain evil. Choosing your seat for $50, and seating a person with their legal companion (or disability aide), even if you didn’t pay extra, are possible at the same time.
As an aside, I’m not entirely convinced that my ticket is $50 less than it would have been with seating fees.
It is quite obviously $50 cheaper. The people who picked their seats paid that $50. Again, you have an option here. If you must sit with you're party, you pay the fee. This isn't a junk fee. It is clearly presented when you select the type of ticket you wish to purchase.
Your complaint has to do with price discrimination. Different levels of service have different prices the same way a Volkswagen costs less than an Audi made in the same factory.
You might have missed my point about the $50. I’m not saying it’s a junk fee, I’m saying it’s abusive to charge it to guardians of children.
I’m also wondering if before the fee was added as an option the price was $50 more since everyone got to choose their seat. I suspect that the fare is about the same, but now you get to pay $50 more to choose your seat.
You are also missing that there is an external cost of splitting up parents and children. The airline is shifting the cost of babysitting onto other passengers when it should be forced to be a responsibility/cost of the guardian.
By the logic of the airline if I don't get to pick my seat, and get placed next to a minor, shouldn’t I get compensated more for that than someone who is sat next to a person who doesn’t need my assistance in an emergency? Should I also get compensated for not getting a drink, what about if I don’t use the restroom.
At a certain point, it is ok to say that a part of living in society is that you don’t get to separate parents from their children.
I understand the economic argument (You’ve used “price discrimination” incorrectly here, incidentally, since price discrimination has to do with receiving the same product at a different price, not receiving an additional service for an additional price). I’m just saying that this is irresponsible and unethical corporate behavior even if it is economically maximizing profit (in the short term anyway)
How is babysitting the child next to you your problem? Just put your noise canceling headphones on and ignore them. If they're kicking the seat in front of them, that person can complain to the flight attendant or whatever
I don't think that's quite right. Until recently, every passenger on the flight had to subsidize your desire to sit next to your child. Now, they don't. It's a loss for you but a win for fairness in general.
It doesn't cost anything to write a computer program, yet we still charge for that service.
Travelers seem to buy flights in one way; sort by price ascending and pick the first result. To be in that first position, you have to figure out what you can "unbundle" from the cost of transport. Things you can unbundle include food, checked bags, and now picking the seat you want. Some people are super price sensitive and will gladly save $50 to sit in a middle seat. So everyone's happy, right? The option to choose a seat in advance is still available, but now there is the option to NOT choose a seat and save $50.
The airlines are masters of figuring out what price you're willing to pay.
I think a good comparison would be a website + hosting. Traditionally, many "agency" type business have designed a website and then hosted it. "Unbundling" would be turning over the source code and letting the customer find hosting at the right price. (At my last job, we did have an agency make our website, and then we hosted it along with the rest of our infrastructure. Incremental hosting cost for us? $0, since we just ran it alongside our internal admin tools, which we were already hosting.)
When I was in either 4th or 5th grade a friend of mine living in another state flew by himself to visit my family. For obvious reasons he was sitting by himself on a flight.
Those are called "unaccompanied minors". The airline takes full responsibility for them; including having the flight attendants check on them regularly. And at the end of the flight, they are handed over to a pre-determined adult.
Under a certain age, this requires a fee and coordination with the airline. I did it too; a flight attendant was tasked with supervising me and I was escorted to my connection and pickup. It’s not the same thing.
Airlines will book you together if seats still remain together...They're not gonna split you up just for the fun of it.
Only way to guarantee seats remain together is to select seats ahead of time. People complain about "junk fees" because they're mandatory parts of the cost. If a website is upfront about a benefit you're losing, it's not a junk fee.
Lastly, these basic fares are really designed for single travelers on a tight budget with fixed plans. Delta's website makes this clear, and websites that don't make it clear really should.
The question is whether it is understood up front that there is a type of ticket that doesn’t allow seat selection, and that the customer has selected that type of ticket.
Until the last few years, this wasn’t even a thing in the US on major airlines. Then United launched their Basic/Shitty Economy and it’s been a race to the bottom ever since.
Are you sure the people complaining didn't prbook seats. I recommend you look at the fine print. Selecting seats does in no way guarantee you the seat that you have selected. I have seen cases where people who prebooked seats got split up, and didn't get a refund for the selection either.
Qatar openly describes their top tier status as having a benefit of "if you want any seat, taken or not, it's yours (unless another top tier person is sitting there)".
I'm aware that the fine print says "if we have to, we will screw you over" but I fly over a dozen flights a year (108 in my Flighty app) and never had a problem. Airlines have moved me, but they always confirm who I'm flying with and it's always an upgrade to get another group together.
This is the sort of thing, we have to have an adult in the room.
When complex, confusing pricing structures exist.. fiddling with them becomes a salesman / marketers main tool. It's what they do everyday, how they operate, the wins bring to the table.
These are the knobs that they twiddle, and have for decades been producing reports quantifying the value of their work. They are now panicking, that they won't know how to do their job.. and reporting to CEOs that profits/sales in all those reports will disappear.
Irl, this is pulling a Band-Aid. You could make all service charges illegal, from cafes to airlines.. and the industries we'll have forgotten about it within weeks or months.
Fun fact: In Europe this kind of junk fees mostly do not exist and taxes are included in prices.
It is weird how much easier it gets for customers to compare offers. Comparing political systems, in the US the gov protects revenues and the EU it protects consumer rights.
You can experience this for yourself: try booking a flight with a old fashioned carrier like lufthansa.de and then go to a "we will rip you off for sure" travel-portal from uk to book the exact same flight or a low-cost airline like ryanair. You find the portal by a simple google search, as they are so "cheap" compared to the official price.
The portal shows a price that is 20% less then the carrier price, but somehow you always end up paying at least 30% more, even IF you are really good at the game of "avoid bullshit upsell checkboxes".
If these fees are outlawed, I wonder what the new equilibrium will be.
The govt talks about how this costs Americans hundreds of billions of dollars, which makes it sound like the money will magically be transferred back to consumers.
But the reality is more complicated, and likely involves businesses migrating these fees into their base prices.
More transparency is good, for sure, but I wonder how much money will actually be saved.
I just want all costs and overhead to be priced into the price of the good or service. I’d rather pay an advertised $200+tax/night for a hotel room than $150+$50 resort fee+tax/night. You’re paying the same amount in the end, but the $200 lump sum price is more honest.
I sell services and I give my customers one lump sum price, where all of my costs (including taxes), overhead, and profit are included with no gotcha fees.
Local governments would love it if all hotel taxes were embedded into the price.
Travel (hotels & car rentals) in the US are industries where the average tax rate is much, much, much higher than the standard sales tax rates for goods sold in the same location. There are all sorts of taxes at that are levied because most of the customers who pay them, don't live there and therefore can't vote against the politicians that imposed them.
I’d actually want the taxes to be enumerated for hotel rooms, since the rate can be much higher than regular sales tax, and varies greatly by location. I generally assume hotel taxes will add 20-25% if it’s not shown otherwise.
Of course for many items the advertised price will simply increase to the true price, as some advertised prices are unsustainable without the hidden fees. That alone is a big win for consumers because they won't have to waste time finding out what the real price is.
It probably will bring some prices down though, by making comparison shopping easier, and by preventing some sales where the customer would have accepted the fee after getting partway through the buying process, but would have rejected the true price up front.
The whole point is to hide the price so you can't compare so they can neuter competition.
Companies can charge whatever they like, but you have to be told. If it's a mandatory fee it has to be disclosed upfront. Money will be saved when competitive pressures save money for consumers.
I don't agree with regulating late fees, especially since there are cards without late fees at all. I did agree with banning over limit fees since there was no way to instruct your bank to decline transactions that would take you over the limit.
They say that the actual total price has to be displayed from the beginning.
If Ticketmaster wants to break down a $250 concert ticket as $180 for the ticket and $70 for an issuing fee, that's fine. But since the fee is mandatory, they have to advertise it as $250, not $180.
They still get the same amount of money but people aren't being lied to, and are better able to make smart decisions about what to buy without having to wade through a morass of fine print.
Well, yes, the only reason the fee exists is so they can break it out of the price for a lower sticker price while recieving the same revenue. If it needs to be included in the sticker price, then there's no reason for ticketmaster to designate it a seperate fee at all
That’s true, and I guess what I wasn’t accounting for is that some people on the margin will choose not to purchase, and have a staycation instead of shelling out for airline tickets and hotel stay, if the fees are all displayed upfront. Right now, those people see artificially lower prices and end up being the proverbial boiled frog, as price increases are revealed through the checkout process.
IF the fees are just "fluff" that adds pure profit to the goods or services rendered, then these new fees regulations will have the government's desired effect. But if the fees are needed to cover costs and expenses, they WILL be incorporated into the bottom line prices, and the regulations will force the advertised prices to rise in lieu of the fees.
As in any "free-market" system, the cost structures of each business will govern its competitiveness and the amount of profit that competition will allow.
And, as usual, the government will find out that further regulating free markets (a three-word oxymoronical phrase) will not achieve the stated goals of lowering the public's costs of goods and services. It might, however, level the playing field in ways that appeal to voters who rely on government to solve all their woes.
>And, as usual, the government will find out that further regulating free markets
Free Markets require information symmetry to function properly and efficiently. The sticker price is ideally supposed to include every cost along with profit margin, such that the buyer pays exactly that price and receives the product/service that's the end of the transaction. Externalities and hidden fees are anti-Free Market, they distort the core fundamental incentive that is supposed to make it work, allowing more expensive products/services to deceive people into buying them over less expensive ones they would have chosen otherwise.
>(a three-word oxymoronical phrase)
Only if you have an extremely understanding of how these tools work. Free Markets are meta-stable constructs without any inherent service to humans, without regulatory maintenance keeping them functional and linking them to people they'd collapse in various ways, or at least be extremely inefficient which defeats the whole point.
>will not achieve the stated goals of lowering the public's costs of goods and services
That is a systemic, long term goal, not just the next week or month. Information symmetry allowing people to make more efficient decisions is the basic driver of competition and sellers improving the value of their offerings. That is what creates lower costs/high value over time, in the same way that breaking up monopolies or monopsonies might well temporarily increase the price of goods/services in certain cases, but leaving them be indefinitely always results in lower efficiency/productivity long term.
If it just causes prices to rise to their actual level so we can make an informed decision instead of being surprised by the price changing when we go to check-in, check-out, or whatever, that's a win.
I would do anything to erase all the lobbying organizations listed in this article to be wiped off the face of the earth and prevent their replacement.
Ridiculous. Transparent pricing is a fundamental feature of market economics and distorting that distorts that feature
Looks like pretty much everyone has fallen victim to such fees. Next time you should consider disputing the charge because it's basically all we can do at the individual level.
All extra fees contribute to GDP growth. Just like cleaning up pollution after spewing it everywhere, selling bombs and rebuilding things they destroy. Its called American genius.
The junk fee legislation seems like a great way to make companies waste millions of dollars in resources rebuilding their backend systems just to result in the exact same fees being rolled into the remaining SKUs or charged to more customers than necessary.
> just to result in the exact same fees being rolled into the remaining SKUs
Yes, that’s the stated goal: if I’m looking for plane flights, I don’t want to think United is cheaper because I haven’t gotten to step seven of the checkout flow where they say that oxygen is billed separately and the bathroom takes all major credit cards.
Companies are adding these fees instead of raising prices precisely because it makes comparison shopping harder, and that’s never good for society as a whole. They’re keenly aware of the psychology here: once people start putting in the cost of filling out forms, etc. they’re less likely to abort halfway in even if the additional fees bring the total higher than they would have picked at the beginning. The companies have spent a lot of additional time and money redesigning their systems to exploit this, and you’re paying for all of that.
The fees aren't the problem, it's that they're hidden until the very end. Makes it impossible to compare services, feels like extortion when asked for after you've already eaten, and is just misleading.
In the EU the advertised price has to be with all fees included. No surprises, and I don't have to care if the hotel is €75 + €25 service fee, or just €100.
if their backend systems are such brownfield crap that they're unable to easily make these kinds of simple changes to their pricing structure, then they deserve to pay millions in incompetent leadership tax.
if prices are presented side by side or are otherwise compared by consumers, they should not have hidden post-comparison mandatory additions that distort that process. price comparison is pretty much the bedrock of a market economy, allowing market participants to distort that process for unfair advantage is clearly a problem.
Hey, more work for software engineers, increasing demand, increasing salaries. Who can complain? Your vacation is easier to plan, and you can take more of them ;)
Hiding the actual cost with sneaky fees is getting out of hand and I have zero sympathy for "oh the poor merchants" or "showing the proper price is too hard." They made the decision to impose the fees, they can make the decision to put them in the price where they belong.