Eleven Strategies for Reducing Negative Responses to Price Increases for Public Park and Recreation Services
Keywords:Pricing, internal reference price, behavioral pricing
AbstractIt is now widely recognized that a cognitive processing approach is likely to be more useful for guiding park and recreation pricing decisions than the traditional approach of using neoclassical economic models. Internal reference price is the central construct in this approach. The paper briefly describes how internal reference prices are formed, and presents 11 strategies that show how internal reference price can be manipulated by park and recreation managers to minimize stakeholder resistance to price changes. Latitude of price acceptance refers to the zone around a reference price within which price increases will be accepted without question. Relationship pricing recognizes that the reference price for one service is influenced by the reference price for other services that are perceived to be similar. The most important implication of introductory pricing is that the initial price charged for a service establishes the reference price for it. The price-quality relationship suggests that in some contexts, price is used by some users as a heuristic to evaluate a service’s quality. Service enhancement pricing acknowledges that users are more likely to support price increases when the resultant revenues are used to maintain and improve the resource at which they are collected. Temporal reframing involves using either a “pennies a day” approach or credit cards to lengthen the timeframe of payment, and this changes the context in which a given price is viewed. Sunk cost effect notes that if a service is fully paid for when it is first used and it is used over a lengthy time period, then commitment to it is likely to decline as time passes. A participant adjustment period occurs when a price is raised beyond the latitude of price acceptance. Odd pricing refers to the tendency for the price of a service to end with a 9 to create an illusion of a lower price. Self-esteem pricing is designed to protect disadvantaged groups from a sense of stigma or loss of dignity. Customary pricing occurs when a price is unchanged, and viability is retained, by cutting costs through reducing the quantity of service offered.
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