As businesses reopen, some add a COVID-19 surcharge
Share Now on:
Scott Sanders owns Tobacco Barn Distillery in southern Maryland. About 50% of his revenue used to come from tastings, where people would also buy his bourbon. He’s planning to reopen soon, but he has to take new precautions.
“We’re gonna have to get some outdoor tents, you know, like a wedding tent type of thing. And then you have to clean after all your guests,” he said. “All the tasting cups have to be … you know, you can’t reuse those cups, so they have to be disposable.”
For now, Sanders said, he’s going to absorb the cost of all that, even though his business has dropped off, down about 90% from what it once was. For his customers to come back, he said, they need to feel safe, without an extra charge.
But some businesses are charging customers for COVID-19-related costs. Some hair salons, restaurants, dentists’ offices are charging for protective gear, more disinfectant and those Plexiglas barriers at the cashier. Sometimes it’s in the form of a clearly stated COVID-19 surcharge, often between 3% and 5%, to cover the cost of things like masks and gloves.
Others have just quietly raised prices.
“Many customers feel caught off guard. The perception is very negative. And I will think this is much more of a public-relations issue than a financial one,” said Ted Rossman, an analyst with CreditCards.com.
Businesses should be transparent about COVID-19-related charges, said Lynne Kizis, a lawyer in New Jersey who specializes in consumer protection. “Certainly a business is generally going to be free to raise their prices to reflect whatever increase in overhead they may have. I mean, that may be rent, insurance, labor costs, material costs.”
What companies can’t do, she said, is advertise one amount for a product or service, but then charge more.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.