Five Ways Your Business Is Being Ripped Off

76356657M payment depot WAYS YOUR BUSINESS IS BEING 5 RIPPED OFF Businesses are often charged more than consumers for the same ser- vices. In economics, this is known as price discrimination and because the elasticity of demand for small businesses is different than regular consumers, business owners get gouged! Credit Card Processing The processors make billions of dollars every year adding a couple per- centage points on top of the true cost from Visa. MasterCard. et al. 2,480,000,000,000 Number of Dollars Exchanged Using Credit Cards in 2012 In 2012, There were 26.2 billion credit transactions in the United States to- taling $2.48 trillion. Credit card processors pocketed more than one per- cent of that, over twenty five billion dollars. 50 18 21 40 30 15 38 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year Credit Cards Debit Cards Prepaid Cards Checks ACH Credit Cards Debit Cards Prepaid Cards Checks ACH Licensing Fees While "borrowing" a copy of Microsoft Word from your nephew might fly at home, that sort of blatant disregard for law will get you in serious trouble. More than $400,000,000,000 was spent on software worldwide last year, with between five and six percent of the total generated by audits. The new Microsoft Office 365 personal license is $7 a month. For busi- nesses, those same services are $13.25 for a single user. Granted, there are some discrepancies in the business and personal services, but you're likely paying for a bunch of stuff you didn't want in the first place. Insurance Insurance is a game of numbers in which the insurers always come out on top. No matter what you're buying insurance for, they calculate risk, add a chunk for overhead, and then charge you for it monthly. 11 American International Group $16,503,438 10 Travelers Companies Inc. $16,126,917 Liberty Mutual $14,535,081 Zurich Insurance Group (3) $10,816,040 ACE Ltd. $8,691,889 CNA Financial Corp. $8,440,261 Hartford Financial Services $7,370,550 Chubb Corp. $7,343,526 Nationwide Mutual Group $7,338,123 American Financial Group Inc. $4,819,736 Thousands of Dollars 2011 2012 2013 Year The return on average surplus in the in- surance industry after the financial crisis. Top direct premium writers and amounts, 2013 Businesses are much more risk averse than an individual be- cause they have so much more to lose. Because of this unique situation, insurance companies know that businesses are more Likely to need their services and that demand often drives prices up. $2336 Bilion $2477 Blon Commercial Personal 2013 direct premiums written Banking Charges Businesses move a ton of money, and they get charged fees to do so. While the cost has declined as financial transfers happen digitally in a fraction of a second, the cost to businesses hasn't declined. ll At banks with more than $25 billion in assets, the median overdraft fee was $35 at the end of 2012, according to Moebs. Banks with less than $100 million in assets charged a median price of $25. Last year's total of $32 billion in overdraft fee revenue was up 1.3% from 2011. Overdraft fees are another means by which the biggest banks in America are over charging their customers. For the privilege of having an over- draft, you may be charged between $25 and $50. Business Travel Next time you're in a hotel room, check out the telephone charges. It's usually less expensive to pay your cell phone provider's long distance charges. Similarly, even touching the items in a mini-bar may get you charged for their con- sumption. Indeed, hotels are liter- ally making billions of dollars off of surcharges like these. The graph ow much hotels make on 2.5 1.5 room surcharges 2001 2003 2005 2007 2009 2011 BILlions of Dollars Airlines can be notorious for charging for everything these days. Sure, rid- ership has gone down, but the fees have risen completely disproportion- ately. Just check out these numbers comparing 2007 to 2011. 624% -5% Total Passengers dropped from 766.6 million to 728.4 million Baggage fees rose from 464 million dollars in 2007 to 3.4 billion in 2011 -11% 160% Total Flights fell from 10.7 million to 9.5 million Cancellation and Change fees jumped from 915 million dollars to 2.4 billion 7-24% A46% Total US Airline Profits fell from 9.3 billion dollars in 2007 to 7.1 billion in 2011 Domestic profit during this time rose from 4.4 to 6.5 billion dollars. Not a huge deal, but one that can add up is the rental-car damage waiver. Very few business travelers will ever need it (insurance is basically there to prey on your fear) especially given that coverage is most likely available from your own insurance or your credit card! Check before your travel to see if you are indeed covered. A simple call to your automobile Always Be On Guard The game continues to change and as profit margins get tighter, these companies are going to try and nickel and dime your business to the edge. While some of these services are definitely good purchases, they might be taking advantage of you because of your position!