Credit card fees are a serious issue for small businesses. Fees can start around two percent. Combine that with increasing costs like labor, product, energy, etc., and that two percent of the total transaction could mean losing up to 10 percent of your profit to credit card fees. In a liquor store, 2 percent fees can be the difference between the high life and keeping the doors open.
The City of Bemidji municipal stores are fighting back by switching to Cloud Retailer’s Dual Pricing software. Dual Pricing is a legally certified way of passing along the credit card and technology fees associated with processing credit cards. This frees up hard-earned profit, which is the oxygen of every business.
How does it work? In the store, all products are labeled with two different prices: a cash price and a card price. The card price is higher than the cash price to cover the payment processing and technology costs. When a customer purchases a product, the cash register will also display the cash and card prices to both the cashier and the customer. The customer decides if they want to pay with cash or a credit card. Once the decision is made, the Point of Sale system does the rest automatically!
Making the switch at the beginning of November 2024, both of the city of Bemidji’s municipal stores have been on Dual Pricing for almost three months at the time of writing. I recently had a chance to speak with Kori Skumavc, superintendent for both stores, and Diana Stittsworth, assistant manager for both stores. We discussed the change to Dual Pricing – the challenges and successes.
There are two municipal stores in the city: First City Liquor and Lakeview Liquor. According to Skumavc, First City is about 7,500 square feet and Lakeview is around 2,000 square feet of retail space. In a town of about sixteen thousand people, the stores are busier than most people would think. Bemidji is near the headwaters of the Mississippi River – they are the first city on the river, thus the name “First City” Liquor. Because of this, the customer base also includes many tourists from out of town going to their cabins, seeing the headwaters, and even passing through on their way to Canada.
From relabeling the store to filling out new applications for credit card processing, there are some moving parts to get a store ready for dual pricing. We touched on the support that Skumavc and her team received before the transition to Dual Pricing. I asked Skumavc how the customer service was. “Amazing! You guys are great! So our support that we get from Cloud Retailer is 100%. I’ve been here for many years and it’s the best that we’ve had, so we do appreciate it, so thank you!”
When speaking about the day that the switchover was done Skumavc said, “It was very simple, the switch was painless – it went very well!”
Leading up to the switch, Skumavc and Stittsworth worked hard to get their store shelf labels changed over to the new pricing format, which shows both cash and card prices. The labels are designed to reduce customer friction as they show both prices, so the customer can choose.
“We prepared for it.” Skumavc said. “We made sure we had I would say about 98% of the shelf tags already letting the customers know in advance that we were going to have cash price and credit card price. So they were aware, those that shopped here on a regular basis…”
When asked if there were any challenges aside from changing the shelf labels Skumavc replied, “You [Cloud Retailer] did such a nice job having everything ready to go for us and explaining everything, it was simple!”
Stittsworth also mentioned that she liked the new labels for sales, “You see that it’s a sale and what the date is and all that on the sales tags, it’s really nice.”
Being that relabeling a liquor store can be a monumental task Skumavc had some advice for owners relabeling their store, “You know just prepare… our employees are amazing too they stepped up to the plate so it was nice that they all pitched in and helped. You just need enough time to be able to make sure that you’re getting those labels done and put on the shelf before you actually go live with the Dual Pricing.”
Many stores fear that switching to Dual Pricing will drive customers away due to the increased cost of using a credit card. However, Skumavc reported that customer attitudes remain largely unchanged after the switch. “I think it’s still the same, a few customers were asking some questions…” She compares it to how some gas stations offer a different price for pay at the pump vs cash in the store. “I said it’s the same thing… Some restaurants are doing it… just a little bit differently, so once they understood that, nobody really had any problems at all with it.”
To further alleviate possible challenges with customers, Stittsworth mentioned, “Another thing that we did, we brought in an ATM machine at both stores so they [customers] have that option.” Even though they made the switch at the start of the busiest season of the year, Skumavc gave a pretty quick “No” when asked if they had seen a decrease in their customer base. To go further we asked what she would say to stores worried about losing customers, “I think if they did what we did with the getting the labels done early enough to look at the difference on the shelf, letting them know. Posting things up and explaining to them and then giving them examples of how it works and what it is. I think it would be just fine… As far as I know we have had zero complaints from customers about the Dual [Pricing]. A lot of people actually appreciate that they can pay cash and not have to use a credit card and save a little bit and so be it.”
The stores were even able to put more competitive pricing on some products, “Not everything but some things…”, Skumavc mentioned, “not having to raise pricing” on several products as costs go up.
They started dual pricing at the start of the busiest time of the year for most stores. In the last two months of 2024, Skumavc reported that they have eliminated nearly $36,000 in credit card fees through Dual Pricing. When speaking on how easy it is to see how much they are saving on credit card fees, Skumavc had this to say, “You [Cloud Retailer] pretty much have that set up for us so we know how to go in to check reports and to see to find out what the savings are. The Cloud Retailer system is pretty handy, it [Cloud Retailer] pretty much does everything for you once you plug it in and lets you know what you’re looking for as far as reporting goes.”
Dual Pricing has been a game changer for the Bemidji municipal liquor stores. Being able to almost completely eliminate all credit card fees and technology fees on the POS frees up a lot of extra money for liquor store owners to be able to do a multitude of things. In Bemidji’s case, this included adding extra funds to the general fund to keep taxes low and put money back into the community. Dual Pricing also allows more competitive prices on products in the store. Skumavc and her team have done a fantastic job in making the switch as successful as it has been.
