Periodic Pricing Revisited: Beyond Pennies-a-Day
Coauthor(s): Atlas, Stephen A. and Daniel M. Bartels
Previous research has shown that periodic pricing (i.e. reframing a single payment as a series of payments over time) can increase a consumer's willingness to purchase by making the cost of purchase seem trivial. We present evidence that triviality is neither a necessary nor sufficient condition for periodic pricing to increase willingness to purchase, and expand the domain of situations in which periodic pricing increase purchase. We propose that periodic pricing amplifies the perception of a transaction’s benefits. We present evidence that this contributes to the pennies-a-day effect and find that periodic pricing can be effective even in cases where each payment is not trivial. We present evidence from four studies that scope insensitivity plays an important role in this effect.
Atlas, Stephen A. and Daniel M. Bartels "Periodic Pricing Revisited: Beyond Pennies-a-Day." , Columbia Business School, (2012).