Having traveled a lot recently, I noticed a phenomenon that presents opportunities to all companies. When companies or industries introduce new charges or fees, customers rebel. Examples include baggage and change fees by airlines and overdraft fees by banks. Customers react by switching if they have options (some industries have such fees across the industry), decreasing loyalty or just consuming less of the product. It is not a surprise that airlines are beset with bankruptcies and banks are much less profitable than in the past (hence the need for bailouts).
While most of those industries argue the fees are essential for profitability, there is another option. Rather than frame the charge as a fee, increase the overall price and provide incentives for the user to get a discount. Rather than charge a fee for maid service, some hotels now give customers a credit or loyalty points for waiving the maid service. Rather than being upset that they are being charged for maid service, the customer is happy that they just received a $5 credit for not having their bed made. I am sure this $5 is included in the cost of the room but the customer leaves with a better impression of the hotel than if they had been charged a fee.
There is an argument that people will select the lowest cost provider regardless, and if the fee is built into the price the customer will go elsewhere, but Southwest Airlines proves this argument does not have much validity. Southwest is one of the few US airlines not to charge for baggage (and thus probably adds the cost to the ticket price), yet Southwest is the only airline to be profitable since 1971. Customers are savvy and those companies that are condescending towards them pay the price in the long-run.
What this means to you
If you do not run an airline or hotel, you may think that there is no way to apply this understanding but that is not the case. It applies to virtually any business, particularly e-commerce. Rather than charging for overnight shipping, offer free shipping but give customers a discount if they accept standard delivery. If you have a free-to-play game, rather than charging users extra if they are not VIPs, give a discount if they join your loyalty program. The key is turn your pricing into something that enhances the customer experience.
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