Be Wary of Adding a Covid-19 Surcharge to your Business

By Randall Orser | Covid-19

As businesses reopen they have to try and make up lost revenue while at the same time having additional operating expenses due to Covid-19.  According to a survey in May by the Canadian Federation of Independent Business (CFIB) 70% of Canadian businesses reported a 30% drop in revenue and the other 30% reported a 40% drop.  On top of these losses businesses have had to cover the cost of the new health and safety protocols including social distancing, cleaning, sanitizing and personal protective equipment.

To try and offset these new expenses some businesses have introduced a Covid-19 surcharge a fixed amount or percentage which is added to the total bill.  While this surcharge is understandable because of the extra cost of dealing with customers during the pandemic, there are some considerations that should be made prior to passing these costs onto the customer.

1.  Consider the ways that you can make extra revenue - these could include making the surcharge optional or donation based, adjusting services or products offered or increasing prices.  The pandemic has had a greater impact on small businesses but they should still take time to consider what is the best way for them to adjust to this new norm and whether it will be temporary or permanent.  They should make sure that they have exhausted all government relief options before charging customers extra.   It should also be a time to focus on giving exceptional service to clients so as to not lose the ones that you have.  If you do apply a surcharge customers need to understand that it is due to the additional costs to reopen your business.

2.  If a surcharge is the right action for your business you need to decide to how you will calculate this additional fee - either as a percentage of the total bill or a fixed amount and it is important to remove it as soon as restrictions are lifted and your business goes back to normal.  Customers need to know that this surcharge is for a specific time and the cut off date will be honoured by your business.  The last thing that you need is for your clients to perceive that you are gouging in a time when everyone is going through financial difficulties.   It is important to inform customers of this extra charge in advance and explain why it is being implemented.

3.  Be upfront and honest with your customers - you need to clearly communicate to your clients the the surcharge is in place long before they reach your checkout.  Customers would rather know in advance so that they can make the decision whether or not to make the business transaction with you.  You should post on your website and social media, inform customers when they make an appointment or during phone calls, and make sure there is a notice posted on your store window or door.  

The response from consumers to paying a surcharge has been varied depending upon the industry type or products offered.  Once they understand why they are being charged extra most people are supportive especially if they know that there is an end date and they know that it is not an opportunity for the business to extra money.

From an article by Sophie Nicholls Jones

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President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.