Consumer response to quantity surcharges: Implications for retail price setters

Abstract

Quantity surcharges occur when a larger-sized package of a brand has a higher per-unit price than its smaller-sized counterpart (which is otherwise equivalent in terms of quality and type of packaging). Although consumers typically expect larger packages to have a quantity discount (i.e., lower per unit prices), quantity surcharges are common among package goods items. Two experimental studies are presented in which consumers' reactions to surcharges are examined. Surcharge pricing was found to impact consumers' evaluations of surcharged brands and their evaluations of retail pricing. In addition, quantity surcharges were found to have a substantial influence on purchase behavior. Moderators of these effects include quantity discount beliefs (i.e., the extent to which consumers believe that large packages are assigned smaller unit prices), surcharge magnitude, and gender. Implications of these findings for retail price setters and suggestions for future research are discussed.