Woolworths announces that from February, it will charge a $2 surcharge for online deliveries and pick-ups scheduled on Sundays and public holidays. The company says the fee reflects higher labour costs on those days. In effect, Woolworths is now using surcharge pricing to pass costs directly to customers rather than absorbing them in overall pricing. This is a clear shift in how a major retailer approaches cost recovery and pricing strategy.
This change matters far beyond one service fee. It touches on value perception, fairness and customer trust. As pricing professionals and business leaders, it is important to unpack what this move means for customers and for the broader pricing culture.
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Surcharge Pricing Strategy and Woolworths Supermarket Delivery
For years, major supermarkets absorbed penalty rates and labour costs into overall margins. They did this quietly. Customers were unaware of the breakdown of costs for services such as delivery or pick-up. Now, Woolworths chooses to itemise one specific cost (Sunday and public holiday labour) and show it on the bill through surcharge pricing, directly affecting supermarket delivery prices.
This practice resembles what we see at cafés or restaurants, where customers expect extra charges for weekend or peak-time service. However, supermarkets operate under different expectations. They are large, established players with deep resources and significant pricing influence, which changes how delivery surcharges are perceived.
What has changed, then, is not just the amount charged. It is how the cost is presented and who is asked to pay it, a shift that now puts Woolworths delivery prices under closer scrutiny.
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The Surcharge Pricing Fairness Problem
Customers usually tolerate surcharges from small businesses. They assume those businesses operate on tight margins and need to pass through costs. They rarely tolerate the same from large corporations using surcharge pricing while posting substantial profits.
Woolworths reported an underlying net profit of about $1.39 billion in the last financial year, despite a year-on-year decline. When a business with this scale starts adding visible fees, customer expectations of fairness rise.
Customers ask: If you can make large profits, why do you need to charge me extra on Sundays? This is not a mathematical question. It is a question of value and legitimacy.
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Why Surcharge Pricing Fees Can Feel Bigger Than They Are
Brands often underestimate how customers perceive add-on fees. In behavioural pricing research, surcharge pricing shows that small fees punch above their weight in psychological impact. A $2 delivery surcharge can trigger stronger reactions than a small increase in the overall price.
Customers notice add-ons at the point of payment, when they are already committed. They compare the fee to the perceived benefit. If the fee feels arbitrary or unfair, frustration grows. It doesn’t matter that $2 is small in absolute terms. What matters is how it makes customers feel about value and fairness.
Some customers may change their behaviour. They may shift deliveries to weekdays to avoid the fee. Others may reduce online shopping altogether. This is a direct revenue risk.
Competitive and Market Risks in Woolworths Business Strategy
Another important factor is market alternatives. Coles has confirmed it will not implement a similar delivery surcharge. This gives Coles a clear competitive point of difference. Customers who dislike surcharge pricing have a viable alternative for weekend pick-ups and deliveries.
The move also lands at a time of closer scrutiny on supermarket delivery prices. Regulators and consumer groups are watching pricing behaviour closely. New price fairness laws set to take effect in July 2026 will impose penalties for excessive pricing, including fines of up to $10 million or more. While the Woolworths surcharge is not illegal, it enters a climate of heightened sensitivity around pricing transparency and fairness.
A Broader Trend: Shifting Costs to Customers
This surcharge sits within a broader trend of surcharge pricing, where costs are increasingly shifted back to consumers. Delivery fees, service charges, booking fees and platform charges are now common across sectors, reshaping supermarket delivery prices.
Recent independent analysis shows that groceries purchased via delivery apps can cost up to 39 per cent more than equivalent in-store prices, once delivery and service fees are added. Customers are paying more for convenience. But they also feel the cumulative impact of fees that were once hidden.
The risk is that convenience becomes a cost burden rather than a value proposition.
What This Teaches Business Leaders
For executives, the key lesson is this: pricing decisions are value decisions. Customers judge prices against what they believe is fair and meaningful. Cost recovery alone does not justify a price in the customer’s mind.
When a business charges visible surcharges, it needs to ask:
- Does this align with how our customers define fairness?
- Will it strengthen or weaken trust?
- Does it enhance long-term value or simply protect short-term margins?
Pricing is not just an accounting exercise. It is a relationship strategy.
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Guidance for Pricing Teams
Pricing teams should be proactive and thoughtful. If you consider surcharges or add-on fees, do not assume customers see them the same way you do. Test how fees are framed. Measure behavioural impact. Segment customers — not everyone reacts the same way.
Explore alternatives to explicit charges:
- Offer bundled service packages.
- Use tiered pricing where extra convenience is built into a premium plan.
- Provide options that frame costs as benefits, not penalties.
Remember: customers are sensitive to how a price is communicated as much as what it is.
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The Real Cost of Convenience in Surcharge Pricing
The real risk is not the $2 charge itself. It is the erosion of trust driven by surcharge pricing. When customers feel they are paying for what was once included, they start to question the value of the whole brand.
For business leaders and executives, this is a moment to revisit pricing culture. Look beyond cost recovery. Consider fairness, transparency, and what your prices say about how you respect customers.
For pricing teams, use this example to sharpen how charges are designed. Protect perceived value. Test impact. Prioritise customer-centred pricing over simple cost pass-through.
Pricing shapes long-term relationships. Choose it with care. If you want support in building an approach that protects trust, strengthens value, and fits your organisation, we would love to help. Reach out for a practical conversation about your pricing and culture. Together, we can turn pricing into a strength, not a risk.
For a comprehensive view of building a great pricing team to prevent loss in revenue, download a complimentary whitepaper on How to Avoid Pricing Chaos.
Are you a business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?
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