What Is Service Charge?
A service charge is an amount businesses or service providers charge for supplementary services provided above the main product. It is typically used in hospitality, property, banking, and other sectors.
Types Of Service Charges
- Hospitality Service Charge: Included in restaurant, hotel, or catering bills for customer service.
- Banking Service Charge: Account maintenance, transaction, ATM, or overdraft fees.
- Real Estate Service Charge: Charges for property maintenance, security, and standard area maintenance in apartments or commercial properties.
- Utility Service Charge: Additional electricity, water, gas, or telecom charges.
- Transport Service Charge: Charges for baggage handling, ticket reservation, or priority seating in airlines and railways.
- E-commerce & Subscription Service Charge: Charges for delivery, packaging, or platform services in online shopping or streaming platforms.
Advantages Of Service Charges
- Covers Extra Costs: Assists companies in managing operational costs.
- Improved Service Quality: Promotes improved customer service and infrastructure development.
- Revenue Generation: Generates additional income for companies.
- Customer Convenience: Integrated services remove separate payments for extra features.
- Fair Pay: Ensures workers receive equitable pay for their labour.
Key Takeaways
A service charge is an added fee companies earn for services performed to finance operations and improve the customer experience. Service charges are present in the hospitality, banking, real estate, and utility sectors. They earn revenue, raise service standards, and guarantee equitable employee compensation.
