Impact Pricing Blog

Should You Add a COVID Surcharge?

Yes and no


Here’s why I say this.

Do a quick web search for “COVID surcharge”, and you will find hundreds of stories on this new phenomenon.  Companies – especially service companies – have higher expenses with fewer customers during this time.  It only seems “fair” they are compensated. 

Determining Fair Pricing During COVID

From a pricing expert’s perspective, is this the right thing to do?  


If you’ve listened to me prior to this post, you know your costs should not drive your prices; customers’ willingness to pay should drive your prices.  However, your customers realize your costs have gone up.  They also realize you’ve been through hard times – they likely feel a little altruistic toward your business.  Because of this, your customers almost certainly have a higher willingness to pay, so you should capture some of it.  A COVID surcharge captures more of their willingness to pay while reminding them why.  


Everything mentioned above is true, but what happens when we get this darned COVID thing under control?  You can no longer have a COVID surcharge, or you look greedy and foolish.  Yet, during these times you are training your customers to pay more.  You are adjusting their reference prices for what they think your products or services should cost.  By removing your COVID surcharge, you will essentially lower your price, which I rarely recommend.  So, instead of having a COVID surcharge, just raise your price.  If someone asks why, you could explain it was because of COVID.  By the time COVID goes away, people will have forgotten your lower prices and just expect the new higher price as normal.  

Advice on Best Options for COVID Pricing

From my perspective, raising your price is your best option, adding a surcharge is your second best option, and your worst option is to do nothing.  If you are in business to make money, the current circumstances practically beg you to raise your prices.  

Of course, this advice doesn’t apply to everyone.  But it does particularly apply to restaurants, hair salons, gyms, and any service business where people gather and interact.  

What are you going to do?  Please let us know in a comment below.

Tags: ask a pricing expert, pricing foundations

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