When 2 + 1 Is Less Than 3: Comparative Pricing Strategies For Premium Upgrades

Using both field and laboratory studies we show that consumers selecting between vertically differentiated products (i.e., between a standard and a premium--objectively better, but more expensive--version) are more likely to choose premium options when premium prices are quoted as the cost of the upgrade rather than the total price. Specifically, we show that Comparative Pricing (CP) strategies make premium options appear less expensive (vs. All-Inclusive Pricing; AIP) due to the smaller numbers used in the price difference representation.

Citation:

Thomas Allard, David J. Hardisty, and Dale Griffin (2016) ,"When 2 + 1 Is Less Than 3: Comparative Pricing Strategies For Premium Upgrades", in NA - Advances in Consumer Research Volume 44, eds. Page Moreau, Stefano Puntoni, and , Duluth, MN : Association for Consumer Research, Pages: 381-381.