Pricing method as a tool for improved price perception

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Abstract:

In the present paper, we have explored pricing methods applied to charging mobile service customers, and the influences of the charging methods on the customers’ price perceptions. The analyses are based on the empirical data collected from Finnish mobile service markets through a quantitative postal survey in 2003. Four hypotheses were tested separately in two customer segments for examining relationship of pricing methods and price perceptions, and the factors affecting to the customers’ pricing method choices. The statistical analyses provided results suggesting that charging methods have a significant effect on customers’ price perceptions. The customers’ price perceptions were found to differ significantly depending on the charging methods they had in use. There was also discovered that customers’ demographic backgrounds, usage experiences of mobile and fixed-line Internet services, and the reference price effect influenced significantly on the customers’ choices and preferences between different charging methods. The results of this study confirmed that a mobile service provider is able obtain positive effects on the customers’ price perceptions by offering right pricing methods to right customers segments. While, pricing models of one-method-fit-for-all induces negative effects.Journal of Revenue and Pricing Management (2006) 5, 207–220. doi:10.1057/palgrave.rpm.5160021

Document Type: Research Article

DOI: http://dx.doi.org/10.1057/palgrave.rpm.5160021

Publication date: October 1, 2006

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