Examining Effectiveness of Partitioned-pricing Strategies and Its Transparency in Online Auction Marketplaces

The current study offers insights into how a pricing strategy called partitioned pricing and its transparency can influence auction success variables. In the online auction environment, auction sellers have to make several surcharge decisions such as whether or not to omit surcharge information from their auction listings or how much the surcharge should be, etc. We found that auctions that did not provide surcharge information generally received lower final prices. This lack of surcharge information transparency however did not affect number of bids. We also found that, contrary to the traditional wisdom in the area of partitioned-pricing, online bidders can accurately adjust their bids according to an auction’s surcharge amount. In addition, we found that the strategy of charging a higher S&H surcharge in an attempt to avoid commission fees did not help promote auction sellers’ revenue, nor the number of bids. Practical guidelines are later offered in the study.