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Price Discounts versus Unit Premiums: Differences in Evaluation Considering Consumers’ Intertemporal Choice


Stadel, D; Stahl, F; Herrmann, A (2010). Price Discounts versus Unit Premiums: Differences in Evaluation Considering Consumers’ Intertemporal Choice. In: 39th EMAC Conference, Copenhagen, 1 June 2010 - 4 June 2010.

Abstract

Price discounts or unit premiums? Two alternative approaches to offer and design subscription tarifs. A firm can offer subscriptions of different durations with specific price discounts, the longer a customer subscribes, the lower the price per time unit. Alternatively, a firm can design and differentiate subscriptions of different periods applying the same price per time unit and offering customers of longer subscription periods a time period of free usage (premium). In this paper, we analyze, whether these two presentations are equivalent in terms of consumers’ evaluation, or, if there are any differences that have major managerial implications for firms offering subscription plans. Our results show that consumers have different expectations when talking about price discounts or unit premiums. Further, we derive implications for firms’ optimal pricing policy of subscriptions.

Abstract

Price discounts or unit premiums? Two alternative approaches to offer and design subscription tarifs. A firm can offer subscriptions of different durations with specific price discounts, the longer a customer subscribes, the lower the price per time unit. Alternatively, a firm can design and differentiate subscriptions of different periods applying the same price per time unit and offering customers of longer subscription periods a time period of free usage (premium). In this paper, we analyze, whether these two presentations are equivalent in terms of consumers’ evaluation, or, if there are any differences that have major managerial implications for firms offering subscription plans. Our results show that consumers have different expectations when talking about price discounts or unit premiums. Further, we derive implications for firms’ optimal pricing policy of subscriptions.

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Additional indexing

Item Type:Conference or Workshop Item (Paper), refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:unit premium, price discount, discounting behaviour, intertemporal choice, subscription tarrif
Language:English
Event End Date:4 June 2010
Deposited On:05 Jan 2011 17:47
Last Modified:05 Apr 2016 14:32
Free access at:Official URL. An embargo period may apply.
Official URL:http://www.emac2010.org

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