The Zero-Price Effect in a Multicomponent Product Context

Abstract

This study replicates and extends prior research from single product contexts and multicomponent product contexts on the zero-price effect, i.e., an overproportional increase in demand when formerly priced products are offered for free. The results reconfirm that the zero-price effect is based on consumers’ emotional responses to the price of zero. The increased positive affect does translate into the zero-price effect in a high-price multicomponent product context but not in a high-price single product context. Interestingly, additional information on the price ratio of the offered products nullifies the zero-price effect in the high-price multicomponent product context.

Keywords: zero-price effect, price affect, bundle, behavioral pricing, emotions, price

JEL Classification: M31