Suddenly, Surcharges are Everywhere
As consumer sentiment plummets, businesses are choosing fee hikes over price increases.
Good morning!
Here are today’s highlights:
Josh Patrick says few owners are prepared for the day after the sale when the phone stops ringing.
President Trump’s latest tariff scheme gets its day in court.
Soaring gas prices are completely upending the gig economy.
And for his next trick, Glen Tullman, a healthcare entrepreneur and amateur magician, will risk making $50 million disappear.
PRICING
There is a reason more and more businesses are turning to surcharges: “An extra 3 percent for paying with a credit card, a 5-percent involuntary contribution to a restaurant’s employee wellness fund, $25 a month in addition to rent for trash collection. Consumers already weary of rising inflation are now contending with a new crop of costs that are hidden in plain sight. New fees or surcharges are popping up everywhere as companies search for ways to recoup their own rising costs while blaming outside pressures. In recent weeks, package-delivery companies and airlines have announced new or higher fees, citing increasing fuel prices. Economists expect more to follow unless oil prices rapidly fall.”
“Yet there is a simple reason why companies like these types of fees, which often don’t show up until a customer is already checking out: They work. A JD Power study released in 2025 found that 34 percent of small businesses were adding credit-card surcharges. A fifth of restaurant operators, meanwhile, now add fees or surcharges to customer checks, according to a 2025 report from the National Restaurant Association, up from 16 percent in 2022. ‘Consumers tend to pay less attention to surcharges than to base prices,’ said Vicki Morwitz, a marketing professor at Columbia University.”
“Researchers call this phenomenon a ‘lock-in effect.’ By the time a surcharge appears at the end of a transaction, consumers have already committed to the purchase and are far less likely to abandon it than if they had seen the full price from the start. That makes them mad. But it doesn’t cause them to change their behavior. ‘The next time I come back, I’m still drawn in by that initial low price,’ said Morwitz. ‘Even if I may have felt tricked the first time.’”
“How much a surcharge irritates consumers depends largely on where it appears in a transaction. Fees disclosed upfront and included in an initial purchase price are generally better-received than those that show up only at checkout, a practice known as drip pricing.” READ MORE
SELLING THE BUSINESS
Josh Patrick writes about the silence after the sale: “You spend decades building something. Your phone rings constantly. Your calendar is packed so tight you can’t find 20 minutes for lunch. People need you. Decisions need to be made. Fires need putting out. Then one day it’s over. Maybe you sold. Maybe you retired. Maybe your body made the decision for you. And the next morning you wake up to ... nothing. No emails demanding attention. No staff lining up outside your office. No customers who need to talk to you right now. Just you. A cup of coffee. And this creeping feeling that you might have made a terrible mistake.”
“Many business owners – and I’m including myself in this – run their lives on what I call the 95/5 split. About 95 percent of your energy goes to the business. The remaining 5 gets divided among family, friends, health, hobbies, and everything else that supposedly matters. You tell yourself you’ll fix it. Once the business stabilizes. Once you hire the right team. Once you close that next big deal. Except you rarely fix it. Because there’s always another ‘once.’ So when you finally leave, you’re not just losing a job or a company. You’re losing 95 percent of your entire life’s structure, identity, and purpose.”
“The people helping you sell your business – bankers, brokers, lawyers – they get paid when the deal closes. They’re usually good, honest professionals. But their entire world is oriented around one thing: getting to the finish line. Questions like ‘What are you really trying to accomplish by selling?’ create friction. They stir up doubts. They slow things down. So those questions often don’t get asked. Or if they do, the answers get a polite nod before everyone pivots back to multiples and tax planning.”
“Here’s something Paul [Cronin from Touchstone Advisors] shared that I found fascinating. Almost every owner hits a moment near the finish line where they want to bolt. Letter of intent signed. Due diligence is mostly done. Purchase agreement in final draft. And one morning you wake up thinking, ‘Maybe I should walk away.’ Deal teams call it cold feet. Many of them try to steamroll right over it. That can be a big mistake.”
“I want to be honest about something. I’m 73 years old. I’m dealing with my own health challenges. I’m building The Long Strange Trip. And I’m still figuring out what life looks like without the daily intensity of running a business. Some days I feel clear about my next chapter. Other days, I’m fighting boredom and wondering what the hell I’m doing with my time. Then I remember that I teach this stuff and I still can’t get it right myself, which is either deeply ironic or deeply human. Probably both.” READ MORE
