The flip side of drip pricing

Abstract

Purpose – The purpose of this paper is to elaborate on the differences between price partitioning and drip pricing with regard to their influence on price recall, purchase intentions and fairness perceptions. In many industries, sellers advertise low prices and reveal other surcharges sequentially as the customer goes through the buying process. To date, little is known about how these sequential, or drip-pricing, techniques influence consumer behavior. Design/methodology/approach – The study is based on an experimental between-subjects design (N = 95) with two groups. The data collection was conducted with a mixed scenario/stimuli-based online survey for a virtual travel agent. Findings – The findings reveal that underestimation of the total price of an offering is significantly weaker when prices are presented sequentially rather than partitioned. In addition to reduced purchase intentions, drip pricing may negatively affect fairness perceptions when consumers feel deceived by the seller. Originality/value – The study replicates findings of previous research on price partitioning but is one of the first empirical studies to examine the influence of sequence in price presentations. With this focus, the study opens up new avenues for pricing research.