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Consumer preference for pay-per-use service tariffs: the roles of mental accounting

Author

Listed:
  • Sejeong Yun

    (Yonsei University Mirae Campus)

  • Kwanho Suk

    (Korea University)

Abstract

When consumers purchase service plans, they often fail to choose the lowest cost alternative because of their general tendency to avoid pay-per-use pricing. The present research examines the role of psychological process in consumer’ preference for price plans, focusing on the reasons for lower preference for pay-per-use plans. In addition, this research proposes a novel method to increase the preference for pay-per-use pricing by simply reframing it as a price plan with an initial allowance and gains and losses from the allowance. The results of seven studies demonstrate that the reframed pay-per-use plan is preferred to the regular pay-per-use plan, although the actual costs are the same. The increased preference for the reframed pay-per-use is caused by the change in the salient reference point that influences the perceived gain and loss of the price plan.

Suggested Citation

  • Sejeong Yun & Kwanho Suk, 2022. "Consumer preference for pay-per-use service tariffs: the roles of mental accounting," Journal of the Academy of Marketing Science, Springer, vol. 50(5), pages 1111-1124, September.
    • Handle: RePEc:spr:joamsc:v:50:y:2022:i:5:d:10.1007_s11747-022-00853-y
    DOI: 10.1007/s11747-022-00853-y
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