Transaction Costs of Unbundled Pricing

First you buy a plane ticket, then pay curbside check-in and for baggage fees at the airport. Once in the plane you pay, separately, for drinks, meals, pillows, inflight movie, Wifi.  Fortunately you can complete all these transactions with your credit card. The price of the additional services you used are large enough, in the $5 to $50 range, to subsume the credit card transaction fee.

Now consider unbundling of content from an website, like  newspaper. Readers are allowed to purchase unbundled articles without buying the whole subscription. The bigger hurdle with this service is how to complete the transaction in a way it is easier and cheaper for the readers and publishers.

Readers cannot be burdened with entering their credit card information every time.
On the other hand, readers can't be asked to register and provide their credit card information because of consumer psychology. Besides, if the articles are priced at just a few cents per view, the transaction cost for the credit cards will end up costing more than the price of the articles.

The transaction costs of unbundling may force firms to not consider it at all. But unbundled pricing does not have to mean  unbundled payments.  There are options like acommon third party systems, like a prepaid calling card or iTunes gift card. I will discuss these in detail in the coming days.