Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • January–February 2020
  • Article
  • Marketing Science

Consumer Reactions to Drip Pricing

By: Shelle Santana, Steven Dallas and Vicki Morwitz
  • Format:Print
ShareBar

Abstract

This research examines how drip pricing—a strategy whereby a firm advertises only part of a product’s price upfront and then reveals additional mandatory or optional fees/surcharges as the consumer proceeds through the buying process—affects consumer choice and satisfaction. Across six studies, we find that when optional surcharges are dripped (vs. revealed upfront) consumers are more likely to initially select a lower base priced option that, after surcharges are included, is often more expensive than the alternative. Moreover, consumers exposed to drip pricing tend to ultimately select this lower base price but higher total price option, even after being exposed to the total price and given the opportunity to change their selection, and even though they are relatively dissatisfied with it. We explore why drip pricing has these effects and find that they are driven by consumers’ perceptions regarding the costs and benefits of starting over and switching. Specifically, we find that high perceived search costs (study 2), self-justification (study 3), and mistaken perceptions regarding the potential gains of switching because of inaccurate beliefs that all firms charge similar additional fees/surcharges (study 4) all play roles. We discuss the implications of these findings for marketers, consumers, and policy makers.

Keywords

Drip Pricing; Pricing; Consumer Protection; Hidden Fees; Price; Consumer Behavior; Perception

Citation

Santana, Shelle, Steven Dallas, and Vicki Morwitz. "Consumer Reactions to Drip Pricing." Marketing Science 39, no. 1 (January–February 2020): 188–210.
  • Find it at Harvard

About The Author

Shelle M. Santana

Marketing
→More Publications

More from the Authors

    • March 2020
    • Faculty Research

    Super Bowl Storytelling

    By: Shelle Santana and Jill Avery
    • March 2020
    • Journal of Retailing

    The Role of Numbers in the Customer Journey

    By: Shelle Santana, Manoj Thomas and Vicki Morwitz
    • July 23, 2019
    • Harvard Business Review (website)

    Is the U.S. on Its Way to Becoming a Cashless Society?

    By: Shelle Santana
More from the Authors
  • Super Bowl Storytelling By: Shelle Santana and Jill Avery
  • The Role of Numbers in the Customer Journey By: Shelle Santana, Manoj Thomas and Vicki Morwitz
  • Is the U.S. on Its Way to Becoming a Cashless Society? By: Shelle Santana
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College