Editor's Note: Learn from a panel of experts and entrepreneurs who have successfully financed their own ventures and are helping others do it at the Thought Leaders Live 2013 event May 29, in Long Beach, Calif. Event and ticket information can be found here.
Nickels and dimes add up fast, and while consumers might not be aware of the extra charges at first, they're sure to feel it in their pocketbooks later. Bob Sullivan coins it "gotcha capitalism" in his book, Gotcha Capitalism: How Hidden Fees Rip You Off Every Day and What You Can Do About It. Whatever you call it, tacking on hidden fees is an exploding trend, says Sullivan. "Companies under intense price pressure have figured out that they can soak consumers by giving them a teaser price, hiding the real price of things and tacking on fees later."
Adding fees may be inevitable for entrepreneurs
doing business in today's economy.
Adding fees may be inevitable for entrepreneurs doing business in today's economy, but gotcha capitalism can be avoided by removing the "gotcha" from the formula. Be clear about the extra fees, recommends Sullivan.
Hayward's servers are trained how to explain the price increases to customers, and most of the time, they find that customers are very understanding. Hayward hasn't noticed a decrease in business as a direct result of her shift, in pricing and she still rang in sales of about $325,000 in 2008. "Have a good explanation for your customers as to why you're doing it," she says. "Most customers are feeling the same pain in the marketplace with the increasing cost of food and energy, and I think they'll be sympathetic."