How price complexity takes its toll: The neglected role of a simplicity bias and fairness in price evaluations

Christian Homburg, Dirk Totzek and Melanie Krämer

Journal of Business Research, 2014, vol. 67, issue 6, 1114-1122

Abstract: Marketing managers commonly employ complex price plans. Surprisingly, limited and conflicting evidence reports how customers perceive and react to complex prices. This study examines perceptions about price complexity and shows that customers tend to prefer simple prices. Two experimental studies show that perceived price complexity negatively affects customer perceptions of price fairness and influences product choice because customers negatively evaluate the transparency of the firm's pricing practices and infer higher total prices. Customers comparing alternate offerings may therefore prefer simple over complex prices, even when the latter are less expensive. Study results suggest limiting price plan variations positively affects customer inferences about transparency and fairness, and thus customer choice.

Keywords: Behavioral pricing; Price complexity; Price transparency; Price fairness; Simplicity bias (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:67:y:2014:i:6:p:1114-1122

DOI: 10.1016/j.jbusres.2013.05.049

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