Is $8.8 per kilogram more expensive than $3.99 per pound? An investigation of the effect of measurement units on price perceptions

Abstract

Retailers often display prices in different formats to make them appear more attractive. In some contexts, they can also attach prices to different measurement units—e.g., cereal can be priced at $3.99 per kg or equivalently at $1.36 per lb. In five experimental studies, we show that consumers' perceptions of expensiveness and consumer spending are heavily influenced by the numerical magnitude of the price (“3.99”) with insufficient attention paid to the measurement unit (“kg”), that this overweighting of numerical magnitude persists across different price formats, and that product price perceptions mediate the effect of measurement system on the price image of the store. Our findings have implications for policy makers as well as pricing practitioners.