O O Ø O O O O
Simplicity In Numbers
Have you noticed how, over the last few years, service companies have been breaking out their lump sum into a ridiculous number of line items with vague descriptions? I’ve been deciphering some of the methods companies are using in making me say “oh, ok, that makes sense” to $600.00 plane tickets and $160.00 phone bills, and they don’t make sense at all. Couple this with trying to get customer service of any kind—I am still trying to finalize bills from my move in April—and I’m really starting to wonder just what it is I get for my money. It seems to me the billing methods are being used to justify their ever-growing fees, not give me peace of mind that I’m getting value for my money.
Almost every company I purchase services from is an offender to varying degrees. The worst two of the bunch these days, in my not-so-humble opinion, are the airlines and the electrical utility.
I get to see how much of my bill contributes to the brand-spanking-new Dodge Ram pickups the meter readers drive
Mapleflot frequently runs ads which highlight low one-way fares to and from various points within North America. The deals look great up front, and then you see the tiny little asterisks beside the bolded “One Way Fare” title header. Reading the text beside said asterisks, you must purchase two one way fares—one from origin to destination, and the second from the destination back to the origin—and there’s usually rules about when you can take those segments to get the fare. Pardon me, but isn’t that known as a “return flight”? How is this different from you using your outdated formula for fare calculations from before? The second, and most galling piece of info they share, is that the fares do not include applicable taxes and fees. Tack on departure taxes, NAV Canada charges, and a few other ill-described surcharges and your ticket is double to quadruple the initially advertised fare. Not quite the same deal as it first appeared to be, eh?
The local electrical company has at least seven different line items that detail what your monthly electrical bill includes. Only two of those charges are directly related to the electricity you consume, the rest are various transmission charges that are paid by the hydro company to other companies (including its own subsidiaries) for maintaining and operating the grid and, get this, billing me. No shit, they actually have a fixed charge to cover off their overhead, so I get to see how much of my bill contributes to the brand-spanking-new Dodge Ram pickups the meter readers drive (didja ever think of maybe, just maybe, using a smaller car that gets something more than 5km/L and is about half the capital cost?). My favorite is the “Debt Retirement Charge” which is used to cover the gross incompetence of those who ran the debt of the now-privatized Ontario Hydro sky-high without any accountability. Why is it that the Ontario government didn’t take action on this before they decided to dump the utility and make it our problem.
“it’s not our fault we’re reaming you, look at our costs!”
While the companies in question provide detail on what the charge description are, they don’t tell me at all why they’re separated out. There’s this neat little concept that’s taught very early on to folks interested in running a business. It’s known as “The Cost of Business” and incorporates all the charges you, as a company, incur delivering your product and/or service to market. It’s a simple concept: if all my expenses total x dollars, and I need to make a percentage profit of y, I should have people smart enough to figure out what multiple of x I need to hit my numbers, taking into account the fluctuations that hit the cost of doing business. It’s not that tough. These guys have the empirical data to back their decisions up. Instead, they point fingers at suppliers and say “It’s not our fault we’re reaming you, look at our costs!”, and pass the costs of poor decision making onto the consumer who pays because they have little choice, or worse yet, uses that information to make their price/value appear to be better than it actually is to the consumer.
Let’s face it, there is damn little competition in Canada, and the monopolies that exist have us all over a barrel. Regulation used to help ensure those monopolies didn’t leave bruises and scars while screwing us, but that regulation is now gone. Companies are free to charge what, in their opinion, the market demands, even if they’re the only player. Canada is tiny, and every major service industry has one or (in very rare cases) two suppliers. It doesn’t make dealing with your competition <cough>price-fixing</cough> very difficult when you have only one (or no) other competitor.
The de-regulation of most of the service industries has allowed service companies to legally charge what they want without a substantial fear of customers walking (for local phone, cable, and hydro delivery, I have one whole provider where I am). They can make acquisitions which build on their monopoly, regardless of expense, and pass the costs along in the near-term in order to satisfy boards and share holders. This has happened in spades over the last decade. We are now paying dearly for their stupidity, and when they get over the hump how many here think they’ll reduce their fees? They’ll just pat themselves on the back for their keen business acumen in delivering better profit margins, and use the money to start the cycle anew.
Putting an “*” beside something which refers to a passage which refers to an additional fee schedule may cover your ass, but it opens mine.
When I purchase a service, I would like to know exactly what I will be paying up front. Putting an “*” beside something which refers to a passage which refers to an additional fee schedule may cover your ass, but it opens mine. When I buy a plane ticket, I want to know how much it will cost in total for me to go from A to B (and maybe back). When I buy electricity, I want to know how much it will cost me per kw/h. When I buy a mobile phone plan, I want to know what my total monthly cost will be before overages, and what those overages will be. I don’t want you throwing numbers in my face and then, after getting interested and investing time, saying "Oh, BTW, there’s these charges..." which bring the cost to something I never would have been interested in. Lay off the Bait and Switch, which is really what you’re doing even though how you’re doing it is legal, if not ethical.
It’s really simple: tell me how much your service costs so I can make an informed decision on whether I think it’s worth it or not. Don’t give me a bullshit contract with a monthly or unit rate that looks awesome, but contains provisions for variable surcharges that make the selling point moot. I don’t give a rat’s ass what your overhead is, because at the end of the day I will pay for it one way or another. Tell me what it will cost me, not what it will cost you.
Take a cue from the oil industry (but only this one, most of their other practices suck donkey). On almost every gas pump in Canada there is a little sticker that gives you an idea of why fuel costs what it does. It’s a marketing ploy which provides information to those who wondered why the cost of gas is so high when equivalent down south is about $0.50/L. It doesn’t get broken down on my receipt to make me feel better about the $0.729/L I just paid. The government sometimes does things of a similar nature with the “where your tax dollar goes” pictograms. Make the information available for educating customers, but don’t use it to fool them into thinking they’re getting value or a good deal.
Tell me what it costs, not what you charge and why. KISS, or when there are real competitors who price things simply, you will be trampled by the stampede of people leaving you. I may just be leading the way.
Tuesday, August 27, 2002
PD DLXII
P.S. - Charles, one little note: Ev reads the referrer logs and points the interesting ones out. Kjell only checks for weenies trying SMTP relay exploits and idiots who still haven’t patched their IIS server ;)
P.P.S. - If you haven’t figured it out yet, we hate Air Canada