Ever noticed that some bill accounts are so complex that it takes a master’s degree to work them out? Put simply…..it’s an illusion to justify a larger cost and/or mask the value that is being charged.
I call the language used in these accounts “bill speak“, so once you understand how to translate it – you will never be fooled again.
Regrettably the world of financial services, telco’s and some utility providers use bill speak to the extreme and appear to compete for the most individual fees for what is fundamentally a single service.
Recently I reviewed a merchant service offering from one of the domestic banks, with it having no less than 6 fees listed against what was a pretty simple service. For full disclosure, there was actually a further 2 fees listed in the offer – one was to cancel the facility and another was the “minimum” fee which could be charged in the month (base costing).
The trick with bill speak is to get it to a “comparative level” on either a transaction or billing cycle basis. At this point, you can start to work with some real costs as they will apply to your cashflow.
To do this, I have found the following the 4 step process works.
1. Collect the data for all of the product fees – regardless of what they are called. In the merchant example above, this would be 6 different fee components. Be careful not be suckered into just taking the headline service fee, as this will only lead to a fee shock down the track.
2. Consider what your normal or expected usage will be – then work out the per transaction or per month cost (will vary depending on the product – but I have normally found that you can do one or the other). For my merchant assessment, I looked at the number and volume of transactions processed monthly, along with the fees to have the schemes. This gave me a monthly fee value – which provides the FIRST value to compare with other providers.
3. Usage values vary – so consider usage 20% up and 20% down your “normal usage” value used in step 2. This will then give you THREE reference points to do your pricing comparison on.
4. Run your fee assessment for each of the providers – for each of the three reference points. What you will often find is that there will be a provider who is good for growth and another that is more targeted at your current estimate – so it is at this point that you can finally decide which is the best for you.
A couple of extra tips;
* For financial service products – spend quality time up front to do a full fee assessment to allow a fully informed decision – then, focus your energies on your business and don’t obsess over the fees each month.
* Try to limit fee contact periods – to 12 months (if you can) and then “review” your fee package to ensure that it remains competitive. If it’s not, then address it with your current provider first as I have found that they will normally price match to retain your business.
Always remember – you are picking up the bill for the fee package you signed up to, so you need to understand what bottom line cost is. If the bill speak is too confusing, then give the variables to the supplier and get them to cost it – or walk away. Never sign up for a package you don’t understand!