The Concept and Problems of Modular price

The new Honda City in India has been launched at a price ranging from 7 Lakh to 14 Lakhs. It has the usual variations of engine-types, interior-options, accessories and so on. Airline tickets come with an insurance that's bundled but if you search, there's a small radio button to exclude the insurance mark-up. There are strong views that unbundling the price is buyer-friendly and more than that, is seen to be transparent. And yet, there are as many examples of prices that are not modular.

You can't order a Dominoes' pizza without the 30 minute guarantee though, it makes sense to imagine, that pizza could be served for less since the risk of free-if-not-within-30-min payout will then not be bundled with the 'base price'. Why is the  price-guarantee-markup not unbundled then? Only Dominoes will know the answer, but I'm guessing it's because the guarantee has become the brand. In some hotels, they'd love to over-charge you for the mineral water, but they think it works better if they hike up the price of the room and give you the water free. What you see is all there is - so Daniel Kahneman says.  

There could be another factor though - breaking a price into three could mean three separate decisions. It could mean confusion. When the buyer is not in the frame to give the decision so much time, it's not beneficial. Of-course when I'm buying a car, I have all the time in the world since it is, monetarily and emotionally, a high-involvement decision. So is a house. A holiday is sometimes not. I'm happy to purchase a 'package' because I really don't want to work for my vacation, especially if I can easily afford it. In the eCommerce world, giving the customer options could mean an extra in-between page in the checkout flow, three extra radio buttons, and an extra click. An extra click means additional drop-out. Traffic drops out at every decision-point in eCommerce, and sometimes it makes sense to not give the user that option to think so hard again.

The balance, in my view, is how one separates buying decisions into packages for segments - Amazon Prime won't ask you to select a payment option every time, it'll just ask you to pay up once and give you faster delivery every time. And for the buffet-lunch-types, just lay out the spread and allow them to choose their food, but don't make them decide and pay at every step.