Monday, March 1, 2010

Add-to-Cart to See Price

Are you annoyed by online shopping sites where you can’t see the price until you add the item to your shopping cart? Here’s one explanation of why you may be seeing more of this. A 2007 Supreme Court decision gave manufacturers greater ability to dictate pricing policies to retailers. One way the manufacturers have become more aggressive is in preventing retailers from advertising products below a certain minimum price. And, the manufacturers consider product pages from online retailer sites to be advertisements. So a retailer who wants to sell below the manufacturer-specified minimum doesn’t let you know the price until you are past the ad.

Note that an alternative explanation for this pricing tactic by retailers relates to the endowment effect – you may actually create a psychological attachment to the product by placing it in your cart, making you willing to pay more.

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