Subscription Boxes: Paying for More Than What’s on the Price Tag

The thing about online shopping is sometimes the listed price doesn’t match what you actually end up spending–and this is not just true for subscription boxes, by the way. As long as something needs to be shipped to you, you’re probably going to have to deal with some sort of added fee or tax.

With subscription boxes, you have a little bit of leeway to feel okay about hidden or additional micropayments, because often a subscription box is guaranteed to contain a collection of items with a combined total retail value that’s double or triple what you spent on the monthly fee to get it. How do you know when you’re getting shafted, though? At what point do you cross the line between just accepting that this is how things work and demanding to know what all those extra charges mean and where all that extra money goes?

 

 

We here at Comparakeet believe in the old adage: forewarned is forearmed. If you know what you should be paying for when it comes to online purchases, it’s easier to spot when something doesn’t quite fit. Research and find out what you actually need to shell out money for beyond the actual price tag. This will also make it easier for you to decide if you really do want to subscribe to monthly box service! Below is a short primer on the usual suspects.

Shipping and Handling

This is the most common fee that gets added to the price of subscription boxes. Shipping fees are easy to understand: Whenever you send a letter via mail, the post office charges you a shipping fee to cover the cost of transporting it from the post office to the address of the recipient. Subscription boxes cost more to transport because of their size, which bumps up the shipping fee that companies need to cover before it arrives at your doorstep.

Handling fees require a little bit more context; but basically, it reflects what the company thinks of as the cost to prepare each box for shipping. For example: if an employee can prepare six boxes in one hour and they get paid an hourly rate of $12, the handling cost is more or less $2, or $12 divided by six. Other factors do add to it, but generally this is how it’s calculated. Note that it shouldn’t include the production cost–that should instead be part of the retail price.

 

 

Special Conditions

It’s important to note that shipping and handling fees will be naturally be higher for items that need extra care. This is because of precautions needed–from extra padding for fragile products to cold shipping for perishable goods–to ensure that the packages get to you undamaged. Whether or not subscription box services bundle this in with the monthly fee they collect from you or not is entirely up to them, but usually this is the case, likely for convenience.

As an aside, when choosing a subscription box service that involves these special conditions, it’s a good idea to make sure that you know what their return and refund policy is just in case a subscription box does not survive transport with all items intact.

Waived Fees

Sometimes–often when a company ships only to local addresses–you’ll find phrases like “free shipping and handling” prominently displayed along with the price. Bespoke Post, for example, offers this to potential subscribers living in the lower 48 states of the US. Often this added bonus to subscription means that the company has calculated and set a box price that covers handling and shipping costs on top of production cost and a margin of profit.

Sales Tax

Sales tax is easy to understand in theory but hard to understand in practice. Put simply, it’s a fee paid to a local governing body for the sale of a certain item or service. The troublesome thing about this is that sales tax has many forms and ways of being enforced across different areas. It’s actually more common internationally to have broadly applied value-added taxes–we’ll touched on that later, too.

In the US, conventional sales taxes vary from state to state–and sometimes even from county to county and city to city. And because the location of the company matters to the application of the sales tax, subscription box services may require people from one or more locations to pay sales tax; while other locations remain exempt. For example: When you subscribe to Gentleman’s Box, you don’t need to pay sales tax unless your boxes ship to a Michigan address. In contrast, Birchbox subscribers from multiple states–California, Massachusetts, New Jersey, New York, Tennessee, Virginia, Washington–are bound by law to pay sales tax.

The best subscription box services–those that are tried and tested and have been around for a long time–cover this issue in their FAQ sections. And because sales tax is typically collected at the point of purchase, you will see the charge applied to the price displayed on the screen before you actually pay for anything online.

International Fees

There are several things you need to watch out for when you’re subscribed to services that need to ship boxes internationally so they can reach you. The easily avoidable ones are credit card fees (in the form of currency conversion fees and foreign transaction fees). Just choose a credit card that doesn’t have foreign transaction fees and decline currency conversion when possible–you can work this out personally with your bank. Note that you can’t avoid this simply by choosing to pay using something other than a credit card–similar fees apply when using PayPal, for example.

 

 

Of course, international shipping is more expensive than local shipping–a very understandable concept–and something that you do need to pay for. Thankfully, most subscription box services provide a list of international shipping rates.

Now comes the hardest part: what you pay for after the point of purchase. If you’re not used to getting packages in the mail, these fees can be an unpleasant surprise. And while it may seem unfair, it’s completely normal for them to be separate from what you’ve already been charged; as that money goes not to the retailer, but to your government. Depending on where you live, you may have to pay brokerage fees, customs fees, duties, processing fees, taxes and more. This can add up to over 10% or even 20% more than what you originally paid for!

Sadly, the only recourse here is to inform yourself of your country’s policies. It’s out of the subscription box service’s hands at this juncture, and paying what’s due to your government in order to claim your subscription box is completely up to you.