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# Just Tell Me What It Costs - ProductFTW #101
- URL: https://www.productftw.com/just-tell-me-what-it-costs-productftw-101/
- Published: 2026-10-29T19:40:00.000Z
- Updated: 2026-10-29T19:40:00.000Z
- Description: Hidden fees and tipping models erode customer trust.
- Author: Matthew Goldman
- Tags: Opinion, Product Management, Fintech

There's been a lot of [news](https://www.americanbanker.com/payments/news/colorado-ag-phil-weiser-takes-on-ewa-provider-earnin?ref=productftw.com) lately about tipping and earned wage access, particularly within fintech. Some companies have built business models around offering a free product while asking customers for tips instead. The pitch is that because no upfront fee is charged, the product is technically free, and customers can voluntarily leave a tip. However, this approach is both misleading and unreliable. It also raises broader questions about pricing strategy, which is essential when deciding how a product should operate.

Dave, now a public company, initially utilized this model with small-dollar loans as a startup. The platform allowed tipping alongside various dark patterns designed to encourage higher tips. Eventually, the FTC took regulatory action against them. [Alex Johnson just wrote about this](https://fintechtakes.com/p/the-sofie-test?ref=productftw.com) and inspired this post. As Alex notes, Dave’s business performance improved after eliminating the tipping model. 

Refusing to learn from Dave’s experience, EarnIn, an earned wage access platform operating on tips, is suing the state of Maryland on free speech grounds to defend its right to request tips. Building pricing models around tips creates numerous operational and regulatory complications that clear, upfront pricing could avoid.

![A hand drops coins into a glass jar already holding dollar bills and loose change, with a few more coins resting at its base. Wavy retro stripes in orange, red, and yellow fill the background.](https://www.productftw.com/content/images/2026/10/pftw-tip-jar.png)

This is not a picture of a business model.

This issue reflects a broader public fatigue with tipping culture, as seen across online discussions on platforms like Reddit’s [/r/tipping](https://www.reddit.com/r/tipping/?ref=productftw.com). Standard gratuity expectations have expanded from 15% for good service to point-of-sale prompts requesting 20%, 25%, or 30%. For instance, paying $8 for a bottle of water at a hotel convenience store in Las Vegas now comes with an automated checkout prompt to tip. Bypassing the option is not always intuitive, creating uncomfortable interactions between customers and service staff. Often, employees are underpaid and rely on these gratuities. As a result, customers feel guilty, employees are put in awkward positions, and businesses avoid addressing underlying wage structures.

Beyond tipping, businesses frequently add surcharges, such as a 4% fee for "fair wages," rather than incorporating these expenses directly into listed prices. Many companies believe that raising base prices will depress sales. Instead, they obscure actual costs, shifting the discomfort onto customers and employees. While it can boost short-term margins, it creates a poor user experience: customers often discover the true cost only at the end of a transaction.

Even companies that initially promise transparent pricing often revert to hidden fees. T-Mobile, for example, previously promoted flat $40 rates with lifetime guarantees. That structure was ultimately abandoned as prices increased and additional fees were reintroduced. What was positioned as a simple, transparent pricing model proved to be a temporary marketing tactic. Ultimately, consumers prefer straightforward pricing over promotional guarantees.

International comparisons highlight this discrepancy clearly. In many countries, taxes are included in displayed prices, whereas in the US, sales tax is added at checkout. Tax rates vary significantly across US jurisdictions and product categories, meaning shelf prices rarely reflect final costs. While consumers have grown accustomed to advertised prices being inaccurate, pricing structures still reflect product strategy.

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During my time at Green Dot, the company charged direct product fees despite the prevalence of "free checking" accounts across the market. Many prospective customers favored Green Dot because of its accessibility and transparent fee schedule. Customers could open accounts 24/7 without traditional credit checks or bank verification barriers.

Traditional banks offered "free" checking that frequently incurred $12 monthly maintenance fees for low balances or $30 overdraft penalties. In contrast, Green Dot charged a predictable $4.95 monthly fee and $9.95 purchase price, without penalizing account holders for low balances or overdrafts. Many customers preferred predictable costs over conditionally free accounts with hidden penalties.

When core deposit-account features are largely commoditized, pricing becomes a central form of product innovation and marketing positioning. Rather than claiming checking was free, Green Dot clearly communicated exact costs, establishing trust and serving as a key differentiator for target customers.

Pricing strategy dictates brand positioning and customer acquisition. Relying on obfuscated monetization mechanisms or tips creates long-term risks, including regulatory intervention, lawsuits, and customer dissatisfaction. A business model built on customer confusion is unsustainable over time.

Displaying fully inclusive pricing—whether at restaurants or checkout registers—is preferable to adding itemized credit card processing fees or operational surcharges. Unbundling standard business expenses only advertises artificially low upfront prices.

Unbundling makes sense when product tiers offer distinct value, such as differentiating economy and first-class airline seats. However, for uniform products like standardized food menu items or debit cards, hidden fees obscure real costs and erode consumer trust.

Pricing must be an integral part of core product design, not an afterthought to fix unit economics. How a product is priced directly shapes the customer experience; introducing ambiguity at checkout immediately disadvantages the user experience.

# About ProductFTW

[*ProductFTW*](https://www.productftw.com/) is a weekly newsletter about product management, with a focus on real-life experiences in startups. We want to help product leaders be successful by giving realistic approaches that aren’t for giant tech companies. We know you don’t have a full-time product designer on each team. We know your software probably hasn’t been used by millions of people worldwide–yet. We’re here to bridge the content gap from building your product and team to scaling it.