Incidence and Magnitude of Quantity Surcharges and Quantity Discounts in Online Shopping

Abstract

Quantity surcharges represent unique situations in which larger quantities of a product are sold at a higher per‐unit price than smaller quantities of the same product. This practice conflicts with commonly held views that consumers would be given a discount for purchasing larger amounts of a product. Most of the studies on the quantity surcharge phenomenon date back over three decades and none have explored the phenomenon in online shopping settings. In this study, utilizing data from an online shopping environment, the incidence of quantity surcharges is examined across various product categories. The drivers of both quantity surcharges and quantity discounts are examined. The findings indicate that quantity surcharges and quantity discounts are affected by the format of prices presented to consumers, the number of quantity options available, online product ratings, and the product category. The paper concludes with a discussion of the findings and implications for research and practice.