Periodic pricing and perceived contract benefits

Document Type

Article

Date of Original Version

1-1-2018

Abstract

Framing a contract's cost as a series of payments over time structures how people mentally account for the contract's benefits. For example, when people are asked to donate to a charity once a year (aggregate pricing), they imagine the benefits they will feel from a single, large donation. In contrast, if the charity frames its request in terms of the equivalent daily donation (periodic pricing), people consider the benefits from making many smaller donations, which is often a more enticing prospect than a single gift. Eight lab experiments and a field test examine how periodic pricing influences purchase intentions. Periodic prices can increase perceived benefits, particularly when people value the first few units of a product each more than additional units of consumption. More frequent payments can help people appreciate recurring pleasures and increase the likelihood of purchasing.

Publication Title, e.g., Journal

Journal of Consumer Research

Volume

45

Issue

2

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