The Incidence and Consumer Perceptions of Quantity Surcharges

A quantity surcharge exists when a larger size of a given packaged brand has a higher unit price than smaller sizes. To study the prevalence and consumer awareness of this phenomenon, as well as the role of point-of-sale unit price information in detecting it, 400 telephone surveys of consumers and 2 price audits of 20 stores in Rhode Island supermarket chains were conducted in 1980 and 1981. Price data on 26 popular product categories revealed substantial numbers of quantity surcharges, about 20% of which could not be explained by price promotions on smaller packages. Furthermore, consumers overwhelmingly expected and were aware of quantity discounts as opposed to surcharges. Results indicate that quantity surcharges can be quite prevalent without attracting much consumer attention and that state-enforced unit price systems often are inadequate for revealing surcharges.