User-friendly pricing

I’m working with a client that’s about to come out with a new pricing structure.

I’ve had nothing to do with the pricing, but I am participating in the customer briefings in which they unveil their new pricing, along side the next-gen of their product suite. And boy, did they get it right. In one move, they have clarified and simplified both their set of offerings and how they charge for them. The customers get it. The customers like it.

What my client did was turn their old, self-centered (not atypical) pricing structure - which worked for them: it was how they thought about their products - with a new price list that is oriented towards how customers buy and, just as important, how customers want to manage things on an ongoing basis (i.e., as simply as possible). Their streamlined pricing replaces what was often an administrative nightmare with something that is logical and easy to understand.

In conjunction with their new product approach - which includes an add on module that I’m guessing the super-majority of their customers will buy, it’s that good - my client does not appear to be leaving any money on the table with their new pricing. Everyone comes away from this one feeling good.

Compare that to the charges that my brother-in-law got socked with on a recent car rental.

We all know about the confusing, should-I-or-shouldn’t-I insurance charges - quick: can you remember off-hand what’s covered by your personal insurance and/or your credit card? I thought not - but what John was aghast at was this:

Taxes, Fees & Extras:

Taxes  15.42  USD

Airport concession fee recovery  10.33  USD

Customer Facility Charge:  15.60  USD

Rental Surcharge  8.00  USD

OPERATIONAL MAINTENANCE RECOVERY AND ENERGY SURCHARGE:  3.77  USD

Taxes, of course, like death, are inevitable.

But airport concession fee recovery? $10.33? Okay, I get that the airport charges the car rental outfit to do business with them, but why is this not just embedded in the cost of the car rental?

And Customer Facility Charge? $15.60? Okay, I get that the airport charges the car rental outfit to do business with them, but isn’t that covered - or, rather, recovered - under the airport concession fee recovery? So just what are we paying for here? $15.60 for your share of bad lighting, uncomfortable plastic chairs, but maybe - if you’re lucky - a reasonably clean restroom?

Then there’s the Rental Surcharge. Surcharge on what? Surcharge on the rate? Then why isn’t it part of the rate?

OPERATIONAL MAINTENANCE RECOVERY AND ENERGY SURCHARGE: $3.77. This is more understandable. I guess. Energy prices are higher this year. But what part of energy are we talking about? The part that goes to pay for the bad lighting in the Customer Facility? The gas and oil for the mini-van that schlepps you - and 6 other people - a mile and a half from the terminal to the Customer Facility? Gee, 6 people times $3.77 - that’s over $20. Last time I looked, it didn’t take $20 worth of gas and oil to go one mile - even if the mini-van were a Hummer. And last time I looked, the gas that goes into the rental car itself is on your dime.

Hey, if the cost of renting a car is the stated rate plus all of the above, then why not incorporate all of the above into the stated rate.

Sure, then you wouldn’t be able to brag about $29.95/day rate …. But you also wouldn’t have people scratching their heads over all of these “extras”.

The car rental agencies - and every other company that piles on these “extras” to their base pricing - should start thinking about clarifying and simplifying their pricing structures.

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