Nothing For Nothing

• by J. Walker Smith , Op-Ed Contributor, August 21, 2024

Here’s a brain teaser. What are things that used to be free but now cost money?

I’ve pulled together this list from my own experience, from asking around and from a couple of sources online. Spoiler alert — for one reason or another I find all of these somewhat perplexing. Certainly, I get it. But it’s worth thinking about.

First, the list:

• Shopping bags. Long true in Europe and the U.K., this came onto my U.S. radar at self-checkout registers in airport newsstands. I fly with my own bag now—the food’s not worth paying extra.

• Air to pump up your tires. This isn’t entirely new, but it’s gone from patchy to ubiquitous. Growing up, I used to ride my ten-speed everywhere. But maybe not if I’d had to fork out quarters for air.

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  Tap water at restaurants. We pay taxes to get clean water from our taps. Now, we must pay to have it brought to our table as well.

• Extra condiments. It’s hard to begrudge restaurants charging for things diners waste and pilfer. But dispensing a first portion so small that I have to buy a second one makes me tetchy.

• Credit card fees. It used to be that retailers wouldn’t accept cards with high fees because they paid these charges themselves. Lately, customers pay them in addition to the interest rates.

• Sports on TV. Indeed, almost everything on TV. Technically speaking, TV was never free. We paid in the currency of attention to ads. Now we pay twice—eyeballs for ads plus subscription fees.

• Radio. Same as TV. The exchange used to be ads for tunes. You can still stream for free with ads, but all the extras come at a premium.

• Trying on clothes. Retailers must protect themselves from showrooming by shoppers who browse then buy online. But strict look-don’t-touch policies turn merchandise into museum pieces.

• Teller fees. This is like many of the fees banks charge. Out-of-network has always been a fee. In-network is capped, after which comes a fee. Banking has gone from a friendly face to a login.

• Hotel amenity fees. The room rate is not the rate. Hotels charge extra for all available amenities, whether you use them or not, and for every extra privilege. Don’t dare check in a minute early.

• Airline fees. There is nothing redeeming about the experience of air travel that doesn’t cost an extra buck. Flying cheap is as close as you can get to mailing yourself there in a cardboard box.

No doubt there’s more that could be added to this list.

What prompted me to ask this question was a recent story in The New York Times about couples charging guests to attend their wedding ceremony. The reasons given by couples interviewed in the article sound similar to the things that brands say when defending fee-based pricing — costs are rising; it’s the only fair way to ration scarce goods or spaces; costs are passed along only to those who really want something; it’s just the way things work these days.

I find it puzzling, though. Because when a value proposition is deconstructed, it is diminished. A product or service can still be reassembled into a premium experience, but only by first turning it into a bare bones commodity. The mystery is stripped away and replaced with a paint-by-numbers surrogate.

None of which is to make light of the pressures faced by brands these days. It is harder than ever to sell value. The implicit message in fee-based pricing is about comfort and convenience. These things used to be part of the package, but if cheap is all that matters, then comfort and convenience will have to come at a premium price. It doesn’t mean a premium experience, though—what used to be the entry-level, ordinary experience costs extra these days.

The biggest thing lost is the relationship. Brand fans get divvied up into price tiers. Customer service gets commoditized. Friends and family at the wedding become arms-length buyers.

Ultimately, it’s about defining the core value proposition. In years past, this was a bundled set of things that constituted the promise delivered by a brand. Nowadays, that promise is contingent upon the individual pieces paid for by a consumer. There is no single proposition. It’s a conditional proposition, defined by whatever configuration of things a consumer pays for.

In effect, fee-based pricing means there is no brand, because every configuration is a different experience. There is a thing bought and sold, but no longer just one thing. This is the puzzle to me—what is the brand.

I don’t have the answer. I just know that today’s regime of fee-based pricing gives people more of a feeling of being nickeled-and-dimed than of being treated like a million bucks. Which sure seems like a market opportunity to me.