In this 5-minute read:
- Pros and cons of adding a COVID fee
- Should you add a COVID surcharge or raise your prices across the board?
- How to add a COVID fee
Many customers and business owners are divided over whether an additional “COVID” fee is appropriate to tack onto bills for services. Some businesses, including dentists, hair salons, and restaurants, have already began this practice and received mixed responses to it.
While some customers and even many business owners are against the COVID fee, others are fully willing to support it in order to help local businesses survive, and recoup some of the overwhelming losses they have sustained and continue to face. So, what should your business do?
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Pros and cons of adding a “COVID” fee or charge to your services
With the division of responses to businesses that have already begun adding COVID fees or surcharges to their bills, it’s important to understand what consumers are thinking in regards to these fees and what kind of response or backlash your business may get if you start them. Let’s start with the negative.
Cons of adding COVID fees
- Your business may see a decrease in customers who aren’t willing to pay additional charges
- Your business may receive backlash and negative publicity online if customers aren’t happy with the way you handle any price increases (for example, here’s an NBC news story about a woman who was unhappy with the $20 “infection control fee” her dentist started charging)
Pros of adding COVID fees
A COVID fee isn’t all bad, especially if it allows your business to continue and recover a portion of lost revenue due to COVID-19. These are some of the positive reasons you may want to add this extra cost.
- The fee helps to mitigate the cost of additional cleaning supplies and PPE
- It can help you pay your employees their standard wages and avoid attrition
- It can help with increased costs from suppliers, who may also be charging additional fees
- Many consumers are willing to help support local businesses during this time, including paying higher prices
Ultimately, you need to decide if the pros outweigh the cons. Can your business afford to continue offering the same prices without adding a COVID fee? Or do you need this additional cost to help manage your expenses?
Consider also what your competitors are doing so you can appeal to the consumer in the best way possible.
Options for adding a COVID fee to your customers’ bill
If you’ve decided that you need to add a COVID fee to keep business going strong, then you need to handle this raise in cost delicately.
There are a couple of different ways that you can do this.
Add a COVID surcharge to the receipt.
Many businesses are adding a surcharge to their receipts to help with their additional expenses. These are the businesses that are receiving the most backlash online, especially when the customer wasn’t expecting it.
The surcharge can be a flat rate applied to every receipt or a percentage of the total bill.
This option is a quick fix to handle any increased costs that have been imposed on the business, but it can be a shock to the customer. If you choose to go with this option, it is imperative that you are transparent with your customers about these fees.
Before they decide to make a purchase, give then ample opportunity to learn about these additional fees. Post a notice on your website and social media, and thank your customers for continuing to support your business. Have a sign posted in your office, lobby, or restaurant to notify customers of the justification for this additional fee.
Most customers will appreciate the information and continue to support you. But if you try to hide this fee and it surprises the customer, you may be in for some bad publicity and lost business.
Raise the cost of your services, products, or menu items.
Rather than adding an additional “COVID surcharge” to the bill or receipt that may surprise—and potentially anger—your customers, you might try raising the cost of your services or menu items to help mitigate your increased expenses during this time.
Customers won’t be surprised when they are already aware of the price they are paying, and from a psychological standpoint, it may make more sense in the customer’s mind to pay a little more for the service than to pay an additional fee.
If you raise your prices too much, that could also come as a shock to customers, particularly any regulars who are familiar with your typical pricing structure. So it’s important to decide how much you need to raise your prices and what is going to benefit your business and the customer in the end.
If someone does ask about your increased prices, be honest with them. Stating that your business has increased expenses associated with COVID-19—additional PPE, sanitation protocols, and increased supplier costs—is something that most of your customers will understand.
It can take more time and be more complicated to increase the price of each of your services or menu items, especially when it comes to managing your POS system or any online ordering options, but it may be well worth the time spent.
Ultimately you need to weigh the pros and cons of each approach, and consider your customers: are they the type to commiserate with you as you discuss the need for adding a COVID fee? Or would they likely prefer to pay a little more for your products and services without having a COVID fee called out?
You may also like: How to turn customer data in to customer loyalty
Get new customers by managing your online reputation
If you decide to increase your prices, it will be especially important to continue managing your online reputation. If there is any backlash or negative feedback in regards to this, you should know about it and be able to handle the situation quickly.
It will also be important to continue to get new customers into your business, particularly as many consumers are reluctant to visit retailers and restaurants in person due to coronavirus fears.
Womply can help with both of these important facets of your business. Our reputation management software makes it easy for you to get notified of every new review on all the popular review sites, and respond to them all directly from your dashboard. It will also allow you to remind customers that you appreciate their feedback online, which can increase the likelihood of keeping your online reputation solid and winning more new customers.
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