Pricing Services and Revenue Management

-monetary costs (e.g., time, physical, psychological, and sensory costs

The less tangible or immediate the payment mechanism, the more consumers tend to spend.

build attendance and strong fan support throughout the season, Red Sox could spread out this large annual payment to four installments that coincide with their games. The team would garner a high game attendance and fan support, and their fans might prefer the lower and financially more manageable installments.

timing of payment can be used more strategically to manage capacity utilization

Bundled prices offer firms a certain level of guaranteed revenue from each customer, while providing customers a clear idea in advance of how much they can expect to pay. Unbundled pricing provides customers with the freedom to choose what to buy and pay for

Recent research suggests that access or subscription fees are an important driver of adoption and customer retention

Consumers of hedonic services such as amusement parks tend to prefer flat rates for access rather than by individual usage as they do not like to be reminded of the pain of paying while enjoying the service.

Firms should build in strategies for retaining valued customers, even to the extent of not charging the maximum feasible amount on a given transaction.

Bundling usually makes price comparisons between the bundles and its components impossible, and thereby sidesteps potential unfairness perceptions and reductions in reference prices. This reduces unfairness perceptions.24

Rate fences framed as customer gains (i.e., discounts) are generally perceived as fairer than those framed as customer losses (i.e., surcharges), even if the situations are economically equivalent.