Divide Tariffs and Prosper? A Focus on the Role of Need for Cognition

This study presents a conceptual replication of the effect of partitioned prices on consumer responses in a subscription service setting. Contrasting Morwitz/Greenleaf/Johnson’s (1998) seminal article, the results of an online experiment reveal that consumers are more likely to buy a subscription service with a partitioned tariff (i.e., a pay-per-use tariff) than with a combined tariff (i.e., a flat rate). This effect occurs even though all consumers are aware of the correct billing price and the billing price is identical in both conditions. However, the negative effect of the partitioned (vs. the combined) tariff on consumer responses is mitigated by high levels of need for cognition. Intriguingly, consumers extremely high in need for cognition show a reversed effect pattern when examining perceived price fairness as the dependent variable, that is, they perceive the partitioned tariff to be fairer than the combined tariff