Customer Reaction and Unbundling

From the customer perspective, how would they react to the itemized pricing? What are their pain-points? What are the budgetary, psychological and transaction costs? How would they react to taking out their wallet to pay multiple times?

I serve as the elected VP of Technology of the student body in my school. I received a very detailed email from one of my classmates regarding the need for one unified payment scheme for all services we use. This person did not like the fact that after paying close to $20,000 for the MBA tuition, we are asked to pay separately for

1. Student association fee
2. Orientation fee
3. Club membership fee
4. Printing supplies fee
5. Business card charges
6. Gym fee
7. etc

The complaint is rooted in both psychological costs and transaction hassles. For the latter, we pay each one of these fees through a separate payment system to separate payees. Psychological reasoning was, " I already decided to spend so much on business school, why are you asking me separately for every thing I need. Why don't you just add these up to the tuition and take it as one upfront payment".

This is not an isolated example. Thaler talks about this in Mental Accounting. I will talk more about this in later articles. But to respond to this customer reaction, I would like to point to the Singapore Airlines example of classes of service.

The complaint I received and Mental Acounting are not about discarding unbundling. They point to the need for serving different segments differently. In the business class Singapore Airlines pampered their customers and did not unbundle their pricing. Similarly, MBAs paying high fee in top schools should be treated as business class (no pun) passengers.