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Avoid Business Losses: Understand Surcharge and How to Manage It Effectively!
Briantama Afiq Ashari
Have you ever been shopping, and then suddenly at the end of the transaction an additional fee appears that surprises you? Well, that's what is usually called a surcharge. In the business world, surcharges are commonplace.
However, if managed carelessly, it can make consumers disappointed and your business reputation will suffer. On the other hand, if you know how to manage surcharge costs appropriately, it can actually help maintain financial stability.
Come on, let's discuss it together so that your business can make more money without making customers run away. Listen to the end, OK!
What is a surcharge?
Source: Freepik
In simple terms, a surcharge is an additional cost beyond the main price of the goods or services you sell. This fee can be fixed or a percentage of the total price.
Usually charged when buyers use certain payment methods, such as credit cards or QRIS. For example, if you buy goods for IDR 100,000, then there is an additional 10% fee.
This means you have to pay IDR 110,000. Well, this addition is called a surcharge fee. Why does there have to be a surcharge? Because some payment methods are subject to deductions from third parties.
So, for example, banks or digital platform providers. So, to cover these costs, sellers often give additional fees to buyers.
What is Freight Surcharge?
Source: Freepik
Apart from the retail sector, these additional costs also often appear in the logistics industry. In this context, freight surcharge is an additional fee imposed on shipping costs.
For example, when fuel prices rise, expedition companies can impose a freight surcharge to cover the increase in operational costs. Well, this can also apply when delivery conditions are not ideal.
The meaning of non-ideal delivery is such as extreme weather or processing to remote areas. So, don't be surprised if the shipping bill is more expensive than usual.
How Surcharges Work in the Real World
You will often come across the practice of surcharging during peak seasons such as Ramadan, Christmas or New Year. Restaurants or shops may charge an additional 10-15% to cover increased operational costs.
Things like this have been very popular on social media. One example is when the term "Eid surcharge" appeared.
There are many people who are surprised, because the surcharge fee is something they didn't know before.
So, it is very important for business actors to be transparent. Don't let customers feel like they've been cheated because they weren't told about this additional fee. So, what are the pros and cons?
Read Also: Check out 5 Secrets & Ways to Make Your Restaurant Successful!
Pros and Cons of Implementing Surcharge
There are pros and cons to implementing this surcharge, what are they? Listen carefully below!
Pro:
1. Maintain Profit Margins
When raw material prices rise or there are additional fees from the bank, a surcharge can help cover the difference.
2. Encourage Efficient Payments
Customers can be encouraged to use cheaper payment methods (such as cash), so they don't get a surcharge.
Against:
1. Influence Customer Loyalty
If customers find out there are additional costs that were not communicated beforehand, it could make them run away.
2. Doesn't Comply with Regulations
In Indonesia, BI has banned surcharges for payments via credit cards and QRIS.
Regulations on Surcharges in Indonesia
Source: Freepik
In order for your business to remain legally safe, you must know the rules of the game. In Indonesia, surcharging is a practice that must comply with Bank Indonesia regulations.
BI Regulation Number 23/6/PBI/2021 states that merchants are prohibited from charging surcharge fees for transactions using EDC or QRIS.
So, if you continue, you could be reprimanded, sanctioned, or even blocked by the payment system.
Meanwhile, abroad, such as Canada or England, there is still flexibility regarding this matter. However, it still has to be clear and transparent to customers.
Surcharge vs Discount: Two Sides of the Same Coin
Very often business owners use discount strategies to attract customers. Well, but there are times when a surcharge strategy is a more realistic choice to maintain margins. For example, you sell food via an online platform.
If you are subject to a high commission cut, instead of reducing prices (which will actually result in losses), you can transparently tell customers there is a small additional fee for online orders.
The important thing is that communication must be honest and clear from the start.
When is the Right Time to Use Surcharge?
Not all conditions are suitable for applying a surcharge. Here are some scenarios you can consider:
- High seasons such as Ramadan, Eid, Christmas or national holidays.
- Highly deductible digital payment method.
- Sudden increase in operational costs.
- Special deliveries or urgent requests.
If you know when and how to apply it, surcharge fees are a powerful tool for maintaining the financial health of your business.
How to Manage Surcharges Without Surprising Customers
Well, this is the most important part. It's okay to apply a surcharge, but you have to do this correctly:
1. Consistent & Transparent
- Write additional fees clearly on the receipt, menu, or checkout page.
- Use signage at the cashier or digital banners at your restaurant.
2. Early Communication
- Don't surprise customers when they want to pay.
- Include the surcharge when ordering, not after the transaction is complete.
3. Determine a Reasonable Percentage
Ideally 5-10%. Don't do more than that unless you provide clear justification.
4. Use an Integrated Bookkeeping System
Surcharges can be complicated if recorded manually. Use a system that can set this automatically.
Case Study: Surcharges in the F&B Industry
In the culinary industry, surcharge fees are something that often arises at special moments.
For example, restaurants that open on Eid sometimes charge additional fees for cover:
- Employee overtime costs
- Raw material prices rise
- Extra services (bukber packages, fast delivery, etc.)
If managed properly, customers will actually understand and be willing to pay more for convenience.
However, if there is no explanation, get ready to get a bad review on Google.
Conclusion
Simply put, a surcharge is a way to maintain the financial stability of your business without having to change the basic price.
However, you have to understand the timing, rules of the game, and how to communicate to customers.
As long as it is done transparently and sensibly, surcharge fees are a smart move in your business strategy.
Don't forget, also adjust to the applicable regulations so you don't get into trouble.
If you want to have a business system that can manage all this automatically and in real-time, just use ESB POS Cashier System.
Not only is it practical, but it also makes your business neater and more professional!
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