June 18, 2008, 6:00 am

You Want Me To Pay For What?

by: The Financial Blogger    Category: Personal Finance
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About two weeks ago, there was an article on surcharge fees on airplanes written by Frugal Trader from Million Dollar Journey. He was wondering if airlines didn’t find a new way to increase their profit or if it was really related to the increase of oil price. In my opinion, it is something in between; Companies (not only airlines) are trying to increase their profit margin without increasing their advertise price.


There are some industries where firms become pros in other and hidden fees. Telecommunication, Instruction, Transport and Airlines are among the evilest doers in the market. What is the real price of their services? Only the mad man behind is big black leather chair in the marketing department really knows…

Telecommunication

I would say that they are the worst people for other fees. They are bad because they advertise their based fee only. In the metro, on the walls, on TV, the only thing you see is $25 for unlimited time! Then, when you receive your bill at home, you have several charges such as admin fee, opening account charge, activation, access to network, 911 an so on. So from your $25 “all included package”, you easily get in the range of $35 to $40, that’s a 40% to 60% increase of your initial price. Definitely, the only thing not included in the package is the real price! The worst part is that you can’t really get away with anything. The only advice I have is to read the fine prints and ask for the total bill to pay per month before signing.

Instruction

Whoa! I just receive my MBA bill for next semester. There is about 35% of my invoice related to “other fees”. We can find fees MBA association, technical support, admin fees and the worst one is really “other charges”. What is behind this mysterious fee? I don’t have a clue! When I did my bachelor degree, we even had “donation” item on our bill! I know that our education system is under financed in Quebec but still, they could at least tell us what we pay for!

Cars

This is probably the only place where I found a way to decrease marginal fees. When you buy a new vehicle, the dealership will charge you for preparation, admin and paperwork and transportation. I know for a fact that they have a huge margin on those fees and you can negotiate on that aspect. A small tip: negotiate everything until the end, once you get to the contract, attack those fees. You should be able to save a few hundred bucks before leaving the dealership 😉

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Comments

Thanks for the mention FB! I read sometime recently that some provinces require travel agents to disclose the total price after all fees, where other provinces don’t. There should be a national consumer protection program for all provinces.

I recently renewed my cell phone plan and found that salespeople have a lot of lattitude in reducing the price of the plan or combining offers. Find a creative salesperson and ask for the lowest possible plan. The salesperson, if he’s good, will try to up-sell you every combination of whatever he can, throwing discounts at you from every angle.

My salesperson gave me a highly upgraded plan, without any activation or network charges at all, for only slightly more than my previous extremely basic plan. They were features I could use and the plan I eventually got was not on any brochure. It was a kind of custom plan that I was happy with, and felt I got a good deal on.

My wife didn’t like the salesperson, but I did. Of course he was trying to get the sale, but I felt in the end that he was able to find us a deal that was higher value than the deal we would have selected from their menu.

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