Srivastava, “Partitioned Presentation of Multicomponent Bundle Prices: Evaluation, Choice and Underlying Processing Effects,” Journal of Consumer Psychology 12, no. Brynjolfsson, “Consumer Decision Making at an Internet Shopbot: Brand Still Matters,” Journal of Industrial Economics 49, no.
Bechwati, “Shipping Charges and Shipping-Charge Skepticism,” Journal of Interactive Marketing 19, no. Xia, “Price Partitioning on the Internet.”ĥ. Monroe, “Price Partitioning on the Internet,” Journal of Interactive Marketing 18, no. 4 (December 2007): 423-436 Morwitz, “Divide and Prosper” and L. Biswas, “Partitioned Pricing: Can We Always Divide and Prosper?” Journal of Retailing 83, no. Kapur, “Pricing on the Internet,” Oxford Review of Economic Policy 17, no. Johnson, “Divide and Prosper: Consumers’ Reactions to Partitioned Prices,” Journal of Marketing Research 35, no. If nearly all customers will be buying both carpeting and delivery, should the price of the carpeting include delivery or should the company charge for it separately?ġ.
Given that most customers neither own a vehicle large enough to transport a living-room–sized piece of carpeting nor have any desire to rent one, delivery is, for all intents and purposes, a required component of the purchase. When should a company “nickel-and-dime” customers by charging separately for various extras, and when is it better to keep things simple by combining all of the charges into one total price?īefore answering, consider another example: The price of wall-to-wall carpeting may or may not include the cost of installation or delivery to the customer’s home. Although charging separately for luggage allows airlines to advertise lower ticket prices, potentially increasing sales, incorporating baggage fees into the ticket price might increase the satisfaction of customers en route as well as raise the retention rate of check-in counter agents. That exchange may have been a loud one if the airline was charging $25 (or more) per bag.
If you’ve spent time at an airport recently, you’re likely to have overheard a conversation between a surprised non-frequent flyer and a ticket agent about fees for checked luggage.
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