• by Mickey Lonchar , July 10, 2009

Your neighborhood video store. Your cell phone carrier. Your credit card company. The airline you flew last week. What do all these companies have in common?

Two things, really. One is that these categories generally score quite low on customer satisfaction surveys. The other is that companies in these categories have become notorious for nickel-and-diming customers.

Coincidence? I don't think so. After all, most marketing gurus are in agreement that it is important for consumers to think of your brand as a "friend." Is this nickel-and-diming something a friend would do?

When we send in our Visa payment a day late, we get socked with a late fee. When we pay our utility or cable bill, we get hit with a franchise fee. When we ask our server to substitute soup for French fries, we get dinged an extra buck. When we travel for business, we get nailed with airport fees, hotel taxes, additional baggage and ticket change fees. And on and on it goes.

What's at the root of this nickel-and-diming phenomenon? It helps to think of it in terms of "price" versus "cost." The price being what the marketer is asking for, the cost being what it really costs the consumer. Too often the marketer is fixated on "price," while what the consumer really cares about is "cost."

BMW's most recent ads demonstrate that the company gets this. Its offer of "free four-year maintenance" will save buyers up to $2,400 versus competitive models.

For those of you who may think that this notion of price vs. cost is a matter of splitting hairs, there are a lot of consumers who would beg to differ. Whenever the issue of pricing comes up in the customer research we do, inevitably the conversation turns to this practice of "nickel-and-diming," and how consumers almost universally hate it more than overpaying for a product in the first place.

Could it be that marketers just don't get how annoying "non-transparent pricing" is, and how it inhibits the building of trust?

From a marketing standpoint, the bigger question would appear to be: Is there a reward in it for the company who dares to buck the trend and hold to an all-inclusive price? I suspect there is. Every transaction is a story, and understanding the difference between "price" and "cost," and respecting the customer by charging her what you said you'd charge her builds an element of trust.

And you can't be a customer's friend if you don't earn her trust.

In conclusion, if creating a positive customer experience is important to you, a great place to look is your pricing structure. Is your pricing transparent? Can you use it to pleasantly surprise customers rather than irk them?

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