The Disaggregation of Service

Posted on 15th August, 2014 in Leadership, Motivation, Delivery, Training

I recently moved house and noted the action of the removals company in pricing the job both net of VAT (for a private residential customer) and asking for an additional fee in order to accept payment by credit card (it was a sum which was hardly likely to be cash).  It is difficult to see any rationale other than to make the proposed fee look as small as possible, and quite different from the actual fee.

The house I had moved out of was a rental and prior to departing I arranged to have the carpets cleaned for a fixed fee.  However when the cleaner arrived he took a look at the few (accurate scale description) spots of wine and dirt and informed me that the basic clean would be insufficient; I would need to pay 60% again; this would require a ‘deep clean.’  I had made the mistake of thinking that the fee was to clean the carpets (if there had been no spots of wine or dirt I wouldn’t have bothered) but it turned out that the fee was in fact to show the cleaning materials to the carpet.  If I wanted to actually remove the dirt, then that would change everything.

Finally the job was done and we (girlfriend rather than cleaner!) went out for dinner.  The bill included an ‘optional’ 12.5% service charge.  Whilst this sort of charge always catches my attention, the other variation which makes even less sense is a service charge for groups of (e.g.) 8 or more.  Surely 8 people all eating at the same table at the same time maximise the return from that table and require less service than 8 individual diners?  There should be a discount!

All of the above effectively amount to vendors showing customers a price for a product or service in the full knowledge that they will actually charge them more in practice.  When you put it like that, it seems amazing that such practices are allowed.  Whilst the cleaning experience could be described as deliberately misleading, such bad examples are fortunately rare.  However credit card and service charges are very common.  In effect the vendor is disaggregating part of the cost of sale (their own costs – credit card fees, wages) and passing them on separately to the consumer.  Why stop there?  Why not charge something for depreciation of the cutlery?  Or a contribution towards the gas for the cooker?  Or crazy as it may seem, just charge the final price from the outset?  The contribution towards the company’s fixed costs and profits is already built into the price (the wholesale cost of my steak and chips was less than £20 and the wine was definitely a lot less than £30), so where does this concept come from?  Being American, my girlfriend is generally something between mildly embarrassed and completely mortified if I tip an amount which doesn’t require us to take on a second mortgage, but why?  Is waiting on tables poorly paid?  Generally, yes.  Is there a case for rewarding good service?  Absolutely.  Is there any connection between those issues and the service provider systematically adding extra charges?  Tenuous…

To those service organisations who price with integrity, I salute you!

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