Divide Price Into Smaller Units

Reduce your primary price as much as possible. Perhaps you can divide this number into smaller units (e.g., fees; see Morwitz, Greenleaf, & Johnson, 1998).

1. Separate the Shipping Cost

Researchers tested bidding structures in online auctions:

• $0.01 with $3.99 shipping
• $4 with free shipping

Auctions with separate shipping generated more revenue (Hossain & Morgan, 2006). Other research confirmed those results (Ward & Clark, 2002).

Caveat: Those studies might be outdated. Today, many customers expect free shipping.

2. Offer Prices in Installments

Instead of selling a course for $1,250, sell the course for 12 payments of $115. Customers will compare the installment price ($115) to the reference price.

• Morwitz, V. G., Greenleaf, E. A., & Johnson, E. J. (1998). Divide and prosper: consumers #reactions to partitioned prices. Journal of marketing research, 35(4), 453-463.
• Hossain, T., & Morgan, J. (2006). ... plus shipping and handling: Revenue (non) equivalence in field experiments on ebay. Advances in Economic Analysis & Policy, 5(2).
• Ward, S. G., & Clark, J. M. (2002). Bidding behavior in on-line auctions: An examination of the eBay Pokemon card market. International Journal of Electronic Commerce, 6(4), 139- 155.