Small businesses feel the pressure of rising prices and hidden fees

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Sophie Demers

MRC PONTIAC – As a result of the pandemic and the slow economic recovery, many local businesses are feeling the effects of increased costs, which get passed along to consumers.

Dan Duggan, owner of Pontiac Home Bakery, explained there are many hidden fees in electronic transactions that affect businesses. “Banks take a fee ranging from 2%-7% when customers pay with debit and credit cards. These fees go up when card holders use tap. For larger businesses, this may not make a difference, but small businesses feel the effect of these fees much more.”

In terms of products and raw materials, Duggan noted larger businesses can make deals with other large corporations to get products at discounts or change ingredients to cheaper ones to accommodate the increased price. Some companies alter the size or proportion of an item to subtly reduce their costs. “As a local bakery that has always used classic ingredients, we pride ourselves on not cutting corners and providing quality baked goods. However, the price of ingredients and materials keep rising, sometimes double or triple what they were before Covid. For example, cinnamon increased by over 200%, going from $96 a case to $232! And, the oil we use for our donuts went from $38 to $90. This would affect restaurants too,” he stated.

Although some businesses have increased their prices, these increases are not proportional to the high cost of the raw material. “Small businesses need to keep their prices reasonable, but also ensure they are making enough to survive,” said Duggan.

Marc Aufranc, owner of Familiprix in Shawville, echoed this by explaining that businesses are paying for features such as tap and points rewards systems, which
eventually drive up the price of goods. “Tap costs businesses twice as much as when card holders insert their card to complete the transaction.”

Aufranc added Quebec small businesses have the most charges and fees, especially for electricity costs. “For residential and large businesses, there was an increase, but not as significant as for small businesses. This puts more pressure on us. We saw this with elevated gas prices; the price of goods went up because the cost of transportation went up.”

Both business owners described a variety of ways they try to keep the costs down, including researching other suppliers, adjusting work hours to be more efficient and charging a little more for products in order to keep them on the shelves. Duggan also said reducing waste is another way to reduce costs. This means ensuring there are no leftover baked goods at the end of the day.