Submitted to Psychology and Marketing Special Issue on the Psychology of Internet Pricing Internet Pricing, Price Satisfaction and Customer Satisfaction

Recent studies suggest that satisfaction with price affects overall customer satisfaction. In the internet market, customer satisfaction is determined by two separate measures: satisfaction with the pre-purchase experience (e.g. ease of use, selection) and satisfaction with the post-purchase experience (e.g., delivery, order tracking, customer service). Using data collected by a commercial web satisfaction firm and the weekly price of a market basket of books, we model the impact of price and price satisfaction on these two measures of e-tailer satisfaction. We find that price has a negative impact on price satisfaction and satisfaction with the pre-purchase experience. Satisfaction with the pre-purchase experience has a positive carry-over effect on the satisfaction with the post-purchase experience. We also find that price satisfaction has a negative effect on satisfaction with the post-purchase experience. These results raise interesting questions about the nature of price satisfaction. They also have important implications for e-tailer pricing strategy.