The 'Base Price' vs the Real Price of Goods and Services

When you budget for a new purchase, make sure you account for the difference between these two.

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We all know about the shenanigans car dealers try to pull when we buy a new car. They advertise one low price. But before you drive out of the showroom, they’ve somehow added on a list of fees like the “sports package,” the “safety option” and the “destination charge.” Then there’s the sales tax. And the financing charges. And if you lease a car? The extra fees just pile up faster.

Last year I bought a car through one of the big box stores. I refused all the extra options. It was about as simple a purchase as you can get. Yet even with that, there was quite a difference between the advertised price, or what I think of as the “base price” and the real price I had to pay.

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The price of the car was $27,653. But that was the base price. Once we added the destination charge, the state tax, and three or four hidden charges (including something called a “Dealer Optional Fee,” whatever that is) the actual cost was $30,385. An extra $2,732. Almost 10 percent more. And that’s without the financing costs.

Unfortunately, instead of the car companies getting better, the rest of the consumer universe is getting worse. I bought two new tires. “Oh, it’s not bad,” the auto mechanic assured me, “only 99 bucks a piece.” But once he added the weight charge, the EPA tire fee, the balancing fee and the local tax, the real price for two tires was $258. An extra 30 percent!

Auto insurance? By the time they tote it all up, it’s twice what the basic rate is. And the bill adds insult to injury with a $5 “Law Enforcement Fee.” I don’t know what that is, except it probably makes it easier for the police to give me a ticket.

Airlines add baggage fees and fuel surcharges. Hotels sneak in fees, on top of the onerous local “hospitality” tax. And have you looked at your cable bill, or your cellphone bill? My basic phone and email charge is $101. But add up all the service charges, administrative charges, usage charges, surcharges and state and local taxes, and the monthly bill comes to $155.

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I bought two tickets to a sports event, for $60 each. They wanted to charge me extra to print the ticket from my computer! I skipped that (they sent tickets by mail for free), but still got assessed a “convenience fee” and an “order processing fee” and instead of $120, it was $139.25. And I purchased two tickets to a summer Shakespeare production. In addition to the ticket price, I had to pay a “facilities fee” and an “online processing fee.” What would the Bard say about that?

I’m not detailing all these annoying, and ultimately expensive, fees just to complain. Instead, consider this a warning. A wake-up call. When you budget for a new purchase, make sure you account for the difference between the “base price” and the real price. And, frankly, you might consider this: The bigger the difference, the more the business is being dishonest. It’s trying to “bait” you with a seemingly low price, then “switch” you to a higher price.

Avoid those fees if you can. If you can’t, say something, just so they know you’re “on” to them.

Unless ... if we could figure out how to add some extra fees into our paychecks. Imagine, you make $25 an hour at work. But at the end of two weeks, you notice a couple of extra line items in your pay stub – you collect an extra $140 as a “work optional” fee and another $75 as a “showing up” fee. Yeah, that’ll happen.

Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement, and other concerns of baby boomers who realize that somehow they have grown up.