Price Format and the Evaluation of Multicomponent Goods

A new link between price format and consumer preferences is introduced in the context of transactions related to multicomponent goods. Multicomponent goods combine a focal object or service (an item of clothing, theater tickets, etc.) with one or more infrastructural elements that fulfill some essential, subordinate role (shipping and handling, booking service, etc.). In this context firms need to decide whether to post a single price (aggregate pricing) or break down the expense into a set of charges that reflects the underlying product structure (disaggregate pricing). Evidence from five studies consistently supports the general hypothesis that price format modifies the shape of consumer response. An information processing explanation is proposed whereby the salience of infrastructural components in evaluation is contingent on price format. This theory reconciles existing contradictory results in the literature and suggests that pricing impacts perceived value as much as it captures it.