Executives often view fees as a pricing decision, but customers view them as a trust decision. Every fee sends a signal about how a company views the relationship – whether it’s trying to eliminate friction for customers or, unfortunately, monetize it.
Some fees seem reasonable, while others seem like punishment, deception, or laziness disguised as politics. The difference matters more than many leaders realize.
Let’s take a look at what fees companies charge, why they charge them, and how they shape the customer experience.
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Fees Customers Don’t Like
Some fees cause almost universal customer frustration because they shift the burden of a company’s operational choices onto the customer. Here are some of the most common.
Return or restocking fees: Sometimes these cover legitimate costs. Most often, they exist because the product descriptions, sizing, or advice was inadequate. Customers are penalized for the uncertainty created by the company.
Surprise fees at checkout (shipping and beyond): Customers tolerate shipping costs. What they do not tolerate is discovering them after having committed to purchasing them. The same goes for vague handling or processing fees that appear late.
Restaurant extras (e.g. “service”, “wellness”, “health care”): The intention may be admirable, but the execution is lacking. Labor is a critical cost of doing business, so factor it into the price. Do not separate it or force customers to reconcile it at the table. I once ate at a restaurant that charged a beautification fee. I asked about this. The restaurant was undergoing renovations and was passing the costs on to its customers. My reaction: It’s not my problem. It wasn’t possible to opt out of the fee, unlike employee service fees, but again, it’s a cost of doing business – or poor planning.
Convenience Fee: This is a masterclass in irony. Customers are charged for using the company’s most efficient and least expensive channel. If it’s okay with you, say so.
Early termination or cancellation fees: These don’t build customer loyalty, they trap them. If someone wants to walk away, the relationship is already broken.
Auto-renewal penalties: Forgetting to cancel shouldn’t be a revenue strategy. Send reminders and give customers the opportunity to unsubscribe before charging them.
Change or modification fees: Life happens. Charging customers for having to adapt, especially when the operational cost is minimal, seems punitive.
Paper billing fees: Charging customers for their preferred format, while pushing yours, is short-sighted.
Payment processing fees: These are basic costs of doing business. Passing them on tells customers that this is a transaction, not a relationship.
Tiered support fees: Charging more to resolve issues with your product indicates that support is a profit center. This shouldn’t be the case – these are table stakes.
Inactivity or dormancy fees: Penalizing customers for not engaging or using them ensures they won’t come back. If utilization is low, the experiment has failed.
On their own, all of these fees may seem minor. Collectively, they signal that the company is optimizing transactions rather than building relationships. Ask yourself:
- Are you looking for short-term income or are you building long-term trust and relationships?
- Do the fees improve the customer experience or make up for it because it’s broken?
Fees that customers typically accept
Not every fee generates the guttural response you expect from paying more, unexpectedly. Customers are willing to pay when fees are logical, transparent, and linked to real value.
- Optional Upgrades: Priority shipping, premium services, and enhanced experiences are choices, not penalties.
- Accelerated or special treatment: If customers ask for something faster or more complex, it makes sense to pay for it. If your costs don’t increase, neither will theirs.
- Usage-based pricing: Paying for what you consume is often considered fair, especially if customers can predict the bill without needing a calculator or a lawyer.
- Professional services: Consultation, installation and custom work fees are accepted when the value is clear. Call it what it is: expertise.
- Reasonable late penalties: Clients accept responsibility when expectations are clear and grace exists.
- Government or regulatory fees: These are tolerated when clearly labeled, so don’t disguise them.
- Premium Access or Membership Levels: Customers will pay for priority and exclusivity if the experience is satisfactory.
Customers will pay for value, choice or actual additional cost. They resist paying for the friction, ambiguity, or convenience of business. When fees compensate for flawed processes, rigid policies, or internal cost structures, customers revolt. When fees are clear, earned and avoidable, customers comply.
Why do companies charge these fees?
Despite the frustration they cause, most unpopular charges do not come from malicious intent. They generally arise from practical commercial pressures and legitimate attempts to offset actual expenses.
Cost recovery: Many fees begin as legitimate attempts to offset real expenses, for example, processing returns, processing payments, or handling special requests. The problem is that companies often charge these costs directly to the customer rather than improving the process that creates the cost in the first place.
Behavior management: Late, cancellation and change fees are intended to shape behavior. In practice, they often feel like a punishment.
Risk management: No-shows, returns and unused reservations create uncertainty. Fees transfer this risk to customers. Often these fees result in real, sunk costs.
Margin protection: In highly competitive industries, base prices are kept artificially low while profitability comes from add-ons and extras, e.g. baggage fees, concert ticket convenience fees, hotel stay fees. Done poorly, these measures become a price camouflage.
Industry standardization: “Everyone does it” is one of the least strategic – and most common – reasons why fees exist.
Financially focused decision making: Many pricing structures come from spreadsheets rather than discussions about designing experiments. Finance sees cost recovery and margins, while customers see friction and lack of transparency.
This gap (between finances and customers), which also largely explains all the other reasons, is ultimately the point where trust erodes.
Why this conversation is important
Fees are not just a pricing strategy: they are a matter of culture and customer centricity. They truly reveal a company’s way of thinking and answer this fundamental question: When friction arises, should it be removed or monetized?
They also reveal broken processes upstream: return fees often indicate poor product information, change fees signal inflexible systems, and support fees reflect underinvestment in service.
In other words, many fees are symptoms rather than solutions and end up shaping trust over time. Customers rarely leave because of a single charge, but repeated friction and small perceived injustices add up.
Brands focused on short-term revenue extraction tolerate this erosion. Brands focused on long-term loyalty are wondering if these fees are really part of the experience. (Check out an article I wrote for MarTech last year on value creation versus value extraction.)
What are the customers’ recourses?
Customers are not completely helpless in the face of unpopular fees, although their options vary. Sometimes the simplest approach is to request a fee waiver. Front-line employees are often empowered to make exceptions, especially for reasonable requests.
Customers can also vote with their wallets. Companies that rely heavily on punitive fees often find that competitors eager to design a better experience quickly gain loyalty.
Public feedback channels such as online reviews and social media can force change, especially when pricing appears misleading. In regulated sectors, formal complaint channels provide additional leverage.
But the most powerful force remains market pressure. When enough customers respond, businesses respond. Some examples of where this has happened include reducing bank overdraft fees and ATM fees, removing airline change fees, and increasing control over unwanted event ticketing fees.
Unfortunately, change rarely comes from internal reflection but rather from external pressures. Let’s change that.
Questions leaders should ask themselves
The real issue is not whether the fees generate revenue. The question is whether they signal the type of relationship the company intends to establish.
Some useful questions leaders should ask (for this internal reflection):
- If we were designing this experience from scratch today, would these fees exist? And why?
- Which of our fees would we be forced to eliminate if a better competitor came along tomorrow? And why?
The conversation should then shift from defending the fees to finding out why they exist. Ultimately, fees are rarely about money; for customers, they are a matter of trust.
