I like it combined: Consumer responses to on -line composite versus partitioned prices.

Abstract

Based on prospect theory and mental accounting, this research argues that composite pricing (a strategy that combines the base price and the surcharge into one price) is more likely to result in favorable consumer reactions than partitioned pricing (a strategy that separates the total price into two prices) when it is hard to ignore surcharges as in on-line purchase situations. Six experimental studies were conducted to test the hypothesis. As predicted, composite pricing led to more favorable responses than partitioned pricing in on-line purchase situations. More importantly, the present research demonstrated that the nature of stimulus- versus recall-based price perceptions moderates consumer evaluations of pricing strategies. When price perceptions were stimulus-driven as on the Internet, composite pricing was more effective in generating favorable consumer responses. However, when price perceptions were recall-based, the relative advantage of composite pricing disappeared.