How price complexity takes its toll: The neglected role of a simplicity bias and fairness in price evaluations

Homburg, Christian; Totzek, Dirk; Kramer, Melanie E.

doi:10.1016/j.jbusres.2013.05.049

Cited by 74 publications

(89 citation statements)

References 49 publications

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“…While the convenience of products and services has been the topic of numerous previous studies, this investigation is the first to show that pricing decisions can also increase convenience for the customer. This finding is also interesting given that other investigators have shown that price complexity as a related construct negatively affects customers' price perceptions (Homburg et al 2014). Importantly, while they refer to price plans that contain several price elements, we show that even one single price can be more or less convenient, depending solely on its ending.…”

Section: Theoretical Implicationssupporting

confidence: 68%

“…In this regard price convenience must be distinguished from the related yet clearly discriminable constructs of price processibility (Zielke 2010) and price complexity (Homburg et al 2014). First, while price convenience is an inherent feature of a single price, price processibility and complexity are context-dependent.…”

Section: Conceptualizing Convenience and Convenience Consciousnessmentioning

confidence: 99%

“…Price processibility is dependent on the context in which the price is displayed, like shelf layout or unit prices (Zielke 2010). The construct of price complexity refers to price plans consisting of multiple price elements and is dependent on the number of these elements as well as the presence of different numbers and the difficulty of calculations necessary to arrive at a final price (Homburg et al 2014). Second, while both price processibility and complexity also capture the notion of a price being easy to process mentally, neither of these constructs includes the idea of time savings.…”

Section: Conceptualizing Convenience and Convenience Consciousnessmentioning

confidence: 99%

See 2 more Smart Citations

Life could be so easy: the convenience effect of round price endings

Wieseke

Kolberg

Schons

2015

J. of the Acad. Mark. Sci.

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Retailers are increasingly using round prices, a trend at odds with the marketing belief in the superiority of just-below prices. However, conclusive empirical evidence on the effectiveness of different price endings is still missing. Addressing this void, this paper presents four fieldexperimental studies with a broad array of samples revealing the central role of convenience in the context of price endings. Findings indicate that consumers perceive round prices as more convenient because their high cognitive accessibility saves time and effort during transactions, which is corroborated using a reaction time measure. Accordingly, round prices increase sales in purchase situations characterized by a high importance of convenience. Further, consumers' convenience consciousness explains preferences for different price endings. This research thus contributes to the behavioral pricing literature by challenging traditional marketing beliefs and providing convincing evidence of the superiority of round prices in a complex world where many customers attach great importance to convenience.

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Section: Theoretical Implicationssupporting

confidence: 68%

Section: Conceptualizing Convenience and Convenience Consciousnessmentioning

confidence: 99%

Section: Conceptualizing Convenience and Convenience Consciousnessmentioning

confidence: 99%

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Life could be so easy: the convenience effect of round price endings

Wieseke

Kolberg

Schons

2015

J. of the Acad. Mark. Sci.

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“…The lack of understanding also contributes to customer rejection of the tariff's mandatory implementation''. Similarly, Homburg et al (2014) find that customers often prefer simple over less expensive yet more complex prices. Thus both suppliers as well as regulators should focus on establishing simple electricity pricing schemes.…”

Section: Customer Acceptance and Adoptionmentioning

confidence: 95%

Price-based load coordination revisited: augmenting open-loop coordination approaches

Flath

Gottwalt

2016

Bus Res

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The activation of flexible loads through demand side management offers opportunities for more efficient power systems operations. Price-based incentive are a straight-forward form for decentral coordination of these flexible loads. However, their applicability has recently been seen more pessimistic as they may induce new load peaks due to herding effects. We revisit these results by characterizing desynchronized posted pricing approaches. Illustrating highly flexible load by means of electric vehicle charging, we show that these desynchronized rate can mitigate the occurrence of extreme load spikes, improve the utilization of renewable generation and in summary create significant system cost savings. Our results show that simple open-loop pricing can almost match the efficiency of closed-loop adaptive pricing in settings with limited system flexibility. We find that the more renewable generation and flexible load are present in the system, the better more complex pricing schemes fare compared to simple ones. This insight may guide regulators and utilities in establishing more effective pricing schemes in retail electricity markets.

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“…Therefore, it may have a detrimental effect when it comes to choosing such tariffs (cf. Homburg et al, 2014).…”

Section: Complexity Of Energy Servicesmentioning

confidence: 99%

Morphological analysis of energy services: Paving the way to quality differentiation in the power sector

et al. 2017

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This is the author's version of a work that was published in the following source:Salah, F.; Flath, C. M.; Schuller, A.; Weinhardt, C. (2017).Morphological analysis of energy services: Paving the way to quality differentiation in the power sector .Energy policy, 106, 614-624. doi:10.1016/j.enpol.2017.03.024 Please note: Copyright is owned by the author(s) and / or the publisher. The commercial use of this copy is not allowed. AbstractThe activation of the still predominantly passive demand side is necessary to further guarantee a stable power system in the short term and ensure capacity adequacy in the long run.A system with a high share of generators with nearly no marginal costs requires new services that facilitate transmitting the right economic signals to the system stakeholders. To this end we refine the notion of energy services and propose a framework to systematically design quality differentiated energy services for consumers. This approach facilitates a value-based economic assessment of energy services that deviates from the marginal-cost-paradigm. We further illustrate pricing options for these new energy service products and outline infrastructural needs and additional use case-specific product properties. Moreover, we discuss how the morphological approach can be formalised using a mathematical programming formulation and introduce a complexity measure that facilitates assessing potential adoption obstacles for end consumers. Additionally, we illustrate the practical applicability of these findings by using a prototypical implementation of a decision support system. To foster differentiated energy services, we recommend a more lenient regulatory regime lowering the barriers for new market entrants.

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How price complexity takes its toll: The neglected role of a simplicity bias and fairness in price evaluations

Cited by 74 publications

References 49 publications

Life could be so easy: the convenience effect of round price endings

Life could be so easy: the convenience effect of round price endings

Price-based load coordination revisited: augmenting open-loop coordination approaches

Morphological analysis of energy services: Paving the way to quality differentiation in the power sector

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