Revenue Skimming

I’ve recently become sensitive to a slight increase in the revenue model I’m choosing to coin Revenue Skimming. No doubt it has an existing name; I am simply unaware of it.

Revenue Skimming is the technique of adding a superfluous charge on top of an existing transaction. It is distinct from simple up-selling as the additional charge is not associated with product in its own right. As a tangent, my favourite up-sell of late is the optional ‘carbon offset’ fee online stores are rolling out allowing them to look conscientious without actually doing anything.

I went Go Karting with a friend and realised that the bill didn’t quite add up. When questioned, I was informed that the discrepancy arose from an additional “driver’s licence registration” fee. I am now the proud owner of a novelty drivers licence card, complete with my picture and twelve month expiry. You need a licence before you can drive.

The obvious disadvantage is that this approach may deter customers. No doubt a minority of customers have stormed out in protest. I am unsure how this model would transfer to a web business as far more effort has been invested in travelling to the Go Kart track compared to navigating to a website. Additionally, it is easier to compare with competitors online.

The obvious advantage is a potentially significant increase in revenue from the same number of customers. Here are two less obvious advantages:

The US warehouse club chain Costco is expanding into Australia. It should be interesting to see how their subscription based shopping model translates to our shores.