10. How to break down prices effectively

Modified on Wed, 30 Jul at 4:03 PM

As e-commerce has evolved, the pricing strategy known as partitioned pricing^[1] has become more popular than in traditional retail.

When selling products (like cars or airline tickets), it can be effective to split the offer into a base product and a series of add-ons — even if some are mandatory. This makes the initial price more appealing and often lower than expected. Research^[2] shows that the higher the price of a product, the more likely customers are to respond positively to a broken-down price versus a total lump sum. However, these add-ons must be relevant, clearly valuable, and typical for the product category.

Example: Audi A3
The base price shown on the Audi website is 101,200 PLN (gross).

Source: Audi.pl

After selecting a better engine and additional features, the price can increase by up to 2.5 times.

Source: Audi.pl

Step by step, the customer adds options they feel are necessary. Individually they don’t cost much, but combined they exceed the base price significantly.

Example: budget airlines

A flight from Warsaw to Athens initially shows a price of 504 PLN (along with a typical “only 1 seat at this price” notice).

After choosing the flight, the passenger learns that the lowest fare includes only a small carry-on. A checked bag requires upgrading to the “Plus” fare, which adds nearly 70% to the base cost.

Despite selecting a round trip, the prices are broken into separate segments. The full price for the Flexi Plus option is 1,525 PLN — over three times the initial displayed price.

Further extras include luggage (117 PLN), sports equipment (72 PLN), insurance (85.73 PLN), parking (7.65 PLN), or in-flight meals (8.60 PLN). The airline uses add-ons that seem useful and value-enhancing.

Conclusion: when selling high-value products, consider offering a base version with optional upgrades. This can boost customer interest and reduce initial hesitation — as long as the add-ons are relevant and offer real value (or are clearly justified, like shipping fees).

^[1] Lee & Han, 2002
^[2] Abraham & Hamilton, 2018