Best in brief: Counting the cost

Discusses the interaction between perceived cost and consumption of a product or service. Pricing policies and payment timings can affect perceptions of cost.

Best in Brief

Harvard Business Review: Counting the cost

John GourvilleandDilip Soman

An important factor in the degree of consumption of any product or service is cost. People who are aware of what a product or service has cost them are more likely to consume it, and consumption increases the chances of loyalty. Higher consumption helps develop longterm relationships and sales as customers are more likely to repeat the same patterns in the future. For example, health club members who work out four times a week are more likely to renew their memberships than those who work out...

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