Partitioning or bundling? Perceived fairness of the surcharge makes a difference
Version of Record online: 7 NOV 2007
© 2007 Wiley Periodicals, Inc.
Psychology & Marketing
Volume 24, Issue 12, pages 1025–1041, December 2007
How to Cite
Sheng, S., Bao, Y. and Pan, Y. (2007), Partitioning or bundling? Perceived fairness of the surcharge makes a difference. Psychol. Mark., 24: 1025–1041. doi: 10.1002/mar.20194
- Issue online: 7 NOV 2007
- Version of Record online: 7 NOV 2007
Partitioned pricing charges a base price and a surcharge instead of an equivalent all-inclusive price. In contrast, a bundling strategy offers a bundled price instead of separate prices for products in one package. Which pricing practice is more profitable? Previous research has shown conflicting results. This research identifies the boundary conditions which circumscribe the profitability of partitioned and bundled pricing. Results of three experiments indicate that the relative significance of the surcharge to the base price influences consumers' perception of the fairness of the surcharge, which in turn influences consumer purchase intentions. Furthermore, given the same level of surcharge, consumers' perceptions of the fairness of the surcharge moderates the effect of the pricing strategies. Thus, perceived fairness of the surcharge appears to be the key in determining whether or not the partitioning strategy is more profitable than the bundling strategy. © 2007 Wiley Periodicals, Inc.