08-02-2006, 08:16 AM
Quote: After reading a recent economics paper from the University of California at Berkeleys Haas School of Business, UC Berkeley graduate and BookFinder.com founder Anirvan Chatterjee, based on the research in the paper, decided to make an across-the-board change to his e-commerce site. Rather than listing only the price of products, the site now lists the total price of products with shipping and handling charges figured in. The change has led to a general if slight increase in conversion rates, Chatterjee tells InternetRetailer.com.
In the paper, ...Plus Shipping and Handling, economists John Morgan and Tanjim Hossain describe an experiment they ran on eBay: customers spent 21% more on CDs with a $.01 starting price and $3.99 shipping vs. identical CDs with a $4.00 starting price and free shipping. In the paper the authors explore why buyers were unconsciously biased toward the $0.01+$3.99 products rather than the revenue equivalent $4.00+$0.00 items...
full article: http://www.internetretailer.com/dailyNews.asp?id=19409