As businesses across the country slowly start opening their doors, customers can expect to see additional surcharges on some services.
The new fees, which are set by the business owner and can vary, are meant to cover the increasing costs that have come as a result of COVID-19. Many services like nail salons, hairdressers and dentists are adding the fees to help catch up financially to cover the period of time they were forced to close down.
The new charges are also meant to cover the additional costs for cleaning products and PPE, like face masks, gloves and gowns, which are mandatory in order for many close-contact services to stay open. For some businesses, like restaurants operating at 50 per cent capacity, the added fee is meant to cover the decline in business in order to accommodate new guidelines.
In May, a restaurant in Missouri got a lot of attention, after a customer posted a photo on Twitter of a receipt, which included a COVID-19 surcharge.
‘Scuse me ... what? A covid surcharge...? pic.twitter.com/IYcrkcqIJ3— Talia (@talialikeitis) May 11, 2020
Sarah Jane Truman, co-owner of The Beehive, a Vancouver hair salon says her business has added a $5 surcharge to cover the costs of disposable masks and cleaning supplies.
“We need giant tubs of barbicide to disinfect above and beyond what is normally considered safe,” she tells Yahoo Canada. “I’d say we’re spending an extra $150 a week on virucide and cleaning materials and hand sanitizer, and that’s having sourced the most affordable options.”
Truman says the new surcharge covers the cost of PPE and some cleaning materials, but not for the loss of productivity. The additional 15 minutes it takes to disinfect a station after each client is causing the salon to lose about an hour and a half worth of income each day.
Thankfully, customers have been understanding and supportive.
”We’ve been very transparent this whole way along with our clients and community,” she says. “We didn’t receive rent relief or loans. People have come together to buy product and help keep us from losing our space. The way I see it, when you run a business, you decide what to charge for your product based on your overhead. Our overhead just went way up. So we raised our prices a tolerable amount to reflect that. Otherwise we’d not be able to stay afloat.”
David Soberman, a professor of marketing at the Rotman School of Management School of Management at the University of Toronto says the fees are set based on the business owner’s discretion. However, competition and customers’ financial flexibility can make an impact on the price they settle on.
“When you own a business of any kind, unless the price is regulated, you can set any price you want,” he says. “One of the things that can constrain that is what your customers are willing to accept and what the competitors are doing.”
Soberman says it’s crucial to inform customers of the added costs before they’re changed. If there’s no transparency, the client legally doesn’t have to pay.
“You can simply refuse to pay it unless you were informed before the transaction,” he says. “Transparency is of paramount importance. People should be able to see what they’re going to pay.”
That means verbally informing customers, or if there’s a sign about the new fee, it has to be somewhere clearly visible. That also goes for any additional costs, outside of provincial and federal taxes.
Soberman says businesses have to improve on communicating why they’ve included additional charges. He suggests that if they clearly laid out how and why they’re charging more, along with numbers, clients would be more understanding.
“That way it would help people understand why it makes sense,” he says.