Can service customers handle price complexity?

Sabine Kuester, Monika C. Schuhmacher, Sven Feurer
2012
Executive Summary Dividing one all-inclusive price into price components is often assumed to have favorable effects for firms. However, a large number of price components renders pricing schemes complex. This price complexity is difficult to handle for customers.  There is need to investigate how customers react to price complexity that arises from different pricing schemes.  Price complexity has a negative effect on customers' perceived price fairness and attitudes towards the offer.
more » ... the offer. Splitting up prices in multiple components may have serious drawbacks for firms.  Customers with a low predisposition to enjoy complex thinking and problem-solving ("need for cognition") show strong negative reactions to complex prices; customers high in need for cognition show positive reactions. Service providers should carefully consider pricing practices that are perceived negatively by a large customer group. Relevance of Topic Goal: Understand the impact of price complexity on perceived price fairness and attitudes towards the offer. Method: Online experiment with 260 customers who were asked to evaluate two-year mobile phone offers that differed in the degree of price complexity. Study Characteristics Investigated industries Complex pricing schemes are often found in service industries in which customers enter into an ongoing formal relationship with the provider, e.g. telecommunication, insurance, B2B services etc.  The present study uses the example of a mobile service provider.
doi:10.24451/arbor.14390 fatcat:unpnbjw3wnbctihj2rej7a4vwi