The Internet provides managers with opportunities to monitor and manage their pricing strategies and tactics with minimum costs. Partitioning the total product sale price into a base price and various surcharges, such as shipping and handling, taxes, and other fees, is one way to manage price structures online. Using three experiments, our research shows that appropriate online price partitioning may enhance consumers' purchase intentions, perceived value, and price satisfaction, and reduce further information search intentions. The effect of price partitioning is due to both consumers' insufficiently adjusting for the surcharge and the clarity of the price structure provided. However, when multiple surcharges are added to partition the price further, these positive effects may decline leading to an inverted "U" shape function of partitioning on price perceptions. Finally, the amount and the way the surcharges are presented are important factors to consider when designing an effective price partitioning structure.
ASJC Scopus subject areas
- Business and International Management