The Effect of Price Presentation Tactics on Consumer Evaluation Effort of Multi-Dimensional Prices

Abstract

Prices in the marketplace often consist of multiple dimensions, such as a base price, percentage discounts, trade-in values, and monthly fees. The presence of multiple dimensions in a price forces consumers to compute the net price in order to determine the value of the presented offer. In two experiments, it is demonstrated that the presentation format of numeric price information and the arithmetic operation required in the price impose a hierarchy on consumers’ evaluation effort for multi-dimensional prices. The resulting variations in consumer effort are shown to systematically influence decision accuracy. Implications challenging the traditional uni-dimensional view of price are discussed.