Bundle Mandatory Socio-moral Surcharges

Airline passengers are painfully familiar with partitioned pricing for optional comforts, such as an additional charge for checking a bag, boarding early, or having extra legroom. Anecdotal reports verify that air travelers grumble about these fees.
     But what about when those additional charges are to fund socially or morally beneficial objectives and when the charges are mandatory? wondered a pair of Virginia Tech researchers. Examples include an environmental sustainability surcharge some Marriott hotels add to the room price, a fee to support fair-trade initiatives levied on Equal Exchange purchases, and an assessment by many restaurants to fund health care insurance for the employees.
     The specific question was whether consumer reactions are better if the bill is presented as a total amount with names of mandatory surcharges noted or if the bill is presented with partitioning of the item price and the itemized prices for any surcharges.
     The answer from analyses of the collected data is that the first arrangement is preferable. Fold surcharges into a total price and name the socio-moral cause without specifying the amount of the total attributable to it, such as, “price includes all taxes, fees, and carbon-offset surcharge.” The problem with the partitioned pricing presentation is that the consumer tends to feel the marketer is avoiding responsibility for the socio-moral cause by passing the charge on to the customer.
     The researchers identified three ways the marketer can use partitioned pricing with socio-moral causes while avoiding the negative impression: 

• Specify that the amounts collected are being forwarded to an entity outside the marketer’s control 
• Show how the marketer supports the socio-moral cause aside from collecting and forwarding the mandatory surcharge 
• Describe ways the surcharge collection benefits the consumer

     I can imagine a marketer using these techniques in circumstances ranging from wanting to show a lower price for the item itself to helping a diner more easily calculate the tip amount based on the price of just the food and drink.
     Partitioned pricing and corporate social responsibility are complex topics in consumer psychology, so take care not to overgeneralize findings. For example, these Virginia Tech researchers found that the problems with partitioned pricing hold only for socio-moral surcharges. With other mandatory surcharges, such as for shipping, partitioned pricing can be the better alternative.
     Then for a counterintuitive finding, consider the study showing how steeply dropping the price of a fair-trade item makes it less attractive to consumers.

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Fear Fair Trade Discount Promotions 

Externalize Surcharges in Partitioned Pricing 

Apologize via Corporate Social Responsibility

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