A FINANCE BLOG ,YOU CAN TRUST
By Jean paul ndindamahina, 04th August 2015.
It is no doubt that any cost towards a product or service is determined taking into account many factors including the cost of low materials,available cost and fixed cost and after adding all that together, the supplier of a service or a product, determines the final cost that we all as consumers believe it is what we should pay in order to compansate service or product. However, there are commpanies that try to charge more than that and they hid that extra cost to make the product or service appear lower priced, easy to obtain and a good value and under this hidden cost consumers are induced to enter a contract that is believed to be cheaper,affordable than it actually is.
Some companies will enduce you with this low priced products and services because they know with this low cost, consumers will be willing to enter the binding contract and later to make it expensive. Take an example of Housing market where landlords advitise the rent price and after the tenant has agreed the rent and signed the contract, months later while settled difficult to obtain another deposit to hunt for another accomodation , the landlord increases the rent. Or take service providers where a consumer is induced to enter the contract of that service with a certain price that is affordable and later to be told that the price of the package is going up and give crooked reasons such as “so that we can bring you bigger and better services”.or Going to the restaurant, you pick up the dish on menu that you can afford and later be told charge services that is above 10%.
In UK this has been a norm where some companies feel they can pray with people’s savings and this causes more people going into more debts and with these hidden cost, it is almost not possible to control your finance. Take example of Tanants, before they get their own rented place, most of them spend time with their family and friends saving for a deposit and another rent paid in advance and when a rent increases does not fit with their bugdet, they would be faced with a threat to become homeless again so does those services providers with hidden cost affect consumers’ finance.
The problem these hidden cost are imposed on consumers with no other choice to oupt out a contract because these costs are meant to surprise a consumer. A Consumer get a bill at the end with a hidden cost and always it means not to be fair to consumer but the hidden cost must be paid to avoid cancelation fees or court case that is time consuming and may not be in the favour of the consumer because current rules and regulations may come in favor of these companies that misrepresent their priced products and services.
You may be wondering how this affect you and your rights. Your rights is that you have to pay for the services you enjoy at leat in UK but these companies makes it more difficult for a consumer to prove that service or product offered was not up to the expected standard hence the consumer always become a victim of a crooked priced product/service.
Almost everyone is affected by these hidden cost. Take an example; according to Margui.K (Maguire, 2014) an average UK worker salary £27000 PA and after taking away income tax, the worker pockets £21,000 or say £1,615 pcm and the saving depends on individual martial status but those with families, financial struggle won’t be resolved by that much salary because after paying rent, insurances,itulities cost , household needs an other essentials, the worker’s saving on salary , remains nothing and totally rely on credit cards and also, these credits cards help them sink into more debts if not well managed.
The relavance here is that that small saving remains on the workers’ salarly is what they use for their entrainment or for their life to enjoy by taking out what they think they can enjoy and those hidden cost companies take advantage from that. Suppose you managed to save £67 and you think to take a day out to restaurant with family and cinema. Your hope is that restaurant cost would cost you £42 and £25 would help you to go to cinema. When you get charged more than you expected supoose on £42 service sharges of £15 is added then the new cost is £57 then it means the consumers’apportunity cost is lost because the payment was higher than expected and going to cinema becomes a myth and over time, hidden cost can physically and spychologically affect consumers wellbeing and behaviour.
The hidden cost can do two things to consumer and that is ruin consumer’s finance control and life.The big issue with these hidden cost, Consumers can not make any budget in advance towards them or be able to contorl them-they are hidden and imposed. Only the savior will be the government to step up and regulate these services that come up with hidden cost and save consumers from their misery caused by these hidden cost. The price tag shown should be the price to be paid.