The End Of Junk Fees: How This New Trend Impacts Real Estate Investors
The president has been making a big and very vocal push to end ‘junk fees’, and to pressure companies into providing all in upfront pricing quotes. How is this being applied in the real estate and finance space? What may it mean for investors?
The Push To End Junk Fees
A recent press conference led by the president heralded some of the brands that have reportedly been shifting away from layers of fragmented fees, to single pricing models. Also called ‘all in upfront pricing’.
There are certainly some sneaky fees and charges that should be done away with, and which really seem to be predatory and victimize those that can least afford it.
Of course, the claim that this change will save American consumers $5B in spending, may be a huge stretch. It is more likely that in many cases fees are just lumped together, and prices may even go up.
The Irony
There appears to be one huge hole and ironic exception to this plan. Which is not including taxes in these so called all in upfront price quotes.
This really destroys the whole concept. It’s an American quirk that you don’t have in other countries, and which may well have inspired all of these other junk fees and fragmented pricing, due to top down leadership examples.
Until this is fixed we won’t have real upfront pricing, all in pricing, or a good customer experience.
We’ve already seen some industries being disrupted by innovative companies that did this on their own, and actually provided less expensive options, for superior customer service and deals. Like MetroPCS in the mobile phone service space. It may be this street level peer pressure which is really most effective in bringing change, and reshaping the players in all industries.
How It’s Being Applied
Some examples of how this trend is showing up may include:
Airbnb’s shift to offering all in nightly pricing options
Banks eliminating overdraft and service fees (though not on mortgages yet)
Simplified pricing on event tickets
Elimination of renter security deposits in favor of monthly fees or higher rents
Summary
Simplified pricing is just common sense. It provides a better user experience, and a more efficient experience, with higher lead conversion potential for businesses. It can also be a fantastic way to disrupt your space, and stand out from the competition. It would just be nice if this also applied to taxes.
This is changing the competitive landscape, and you should be considering your pricing strategy and revenue streams to stay ahead of it.
