When Should You Nickel-and-Dime Your Customers Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

While standard economic theory (and common sense) suggests that customers should be as willing to buy carpet for $ 500 plus shipping for $ 100, since they are purchased carpet with free shipping for $ 600, recent studies show that the price of parts, in the manner in which the total cost is divided into components that affect the customer price perception and their willingness to buy and even a chance to buy from the same manufacturer. The challenge is determining when to charge separately for the crowd, but when combined into a single additional price. If the "nickel-and-diming" your customers, or "simple things" is more effective for a particular transaction depends on many factors, such as a shop than customers, whether they are more sensitive to the price of some of the components (delivered) than other (carpets), whether the price of one component is small or large compared to the others, whether the company controls costs and quality of a particular component, and which components are the most central goals of the customer. The authors provide managers with a framework decision, to determine when to separate what they are taking on some parts, and when the contract all in one price. "Hide
by Rebecca W. Hamilton, Ajay Thomas Abraham, Joydeep Srivastava Source: MIT Sloan Management Review 11 pages. Publication Date: 01 Oct 2010. Prod. #: SMR365-PDF-ENG