Drip Pricing

Anyone who has shopped for an airline ticket online has experienced drip pricing, as each successive screen seems to reveal another fee throughout the purchasing process. This practice is becoming prevalent in a variety of industries, but its effect on consumers is not well understood. Through a series of experiments, Professor Santana has shown that while drip pricing often increases consumer demand in the short term, it can also create negative feelings among consumers and lower their repeat purchase intentions with the seller in the long run. How then do firms that practice drip pricing stay in business? One answer may be a continual supply of so-called naïve consumers entering the market. Another aspect of Professor Santana’s work in this area involves exploring the efficacy of regulatory measures taken to curb the effects of drip pricing on consumers.