Table 131 Aug 2026From “Tiered pricing is a promise with a cost-to-serve boundary”

The tier-promise and cost boundary

Keep the customer promise and the provider's delivery boundary in the same row. A tier is incomplete when its transition or exception rule is blank.

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Table 1The tier-promise and cost boundary

Source: Author's decision worksheet grounded in Zbaracki et al. (2004), Urbany, Madden and Dickson (1989), Kienzler, Kowalkowski and Kindström (2021), and Grennan and Swanson (2020). Labels are synthetic; no prices, customer terms, or current service data are shown.

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A G04-C5 The cost types, named: "we identify and measure three types of managerial costs information gathering decision making and communication costs and two types of customer costs communication and negotiation costs"zbaracki-etal-2004-price-adjustment-costs · published full text
A G04-C6 One firm, and the paper says so: the totals are "1 22 of the company s revenue and 20 03 of the company s net margin": a single U.S. industrial manufacturer, not a benchmarkzbaracki-etal-2004-price-adjustment-costs · published full text
A URB89-C1 The KKT prediction held: "we obtain empirical support for kkt s prediction that unjustified price increases are perceived as unfair while cost justification legitimates a price increase in consumers eyes"urbany-madden-dickson-1989-dual-entitlement
A URB89-C2 And the part usually dropped: "we also find however that fairness perceptions are not significantly related to behavioral intentions as the theory would suggest"urbany-madden-dickson-1989-dual-entitlement
A KKK21-C1 At equal cost, 68% of purchasing professionals chose the flat rate (Study 1, n = 124, ~40 per condition, cloud analytics). The design is scenario-based: "A series of four experiments showed that experienced purchasing professionals tend to exhibit a flat-rate bias in their price plan choices", and "they preferred the flat-rate over the pay-per-use option" in the equal conditionKienzler, Kowalkowski & Kindström (2021), Journal of Business Research 132, 403–415 · VoR held
A KKK21-C3 Only the bounds varied: "All participants saw the same past average monthly usage (500 h), but the minimum and maximum usage values were varied to create two conditions (100 and 600 h versus 400 and 900 h, respectively)", and "Participants in the equal condition (89%) were significantly more likely than chance to choose the flat rate when past usage indicated upper bound extremes", while "However, this was not the case (56%) when past usage information indicated lower bound extremes"Kienzler, Kowalkowski & Kindström (2021), Journal of Business Research 132, 403–415 · VoR held
A GS20-C1 Hospitals gaining peer-price benchmarking saved 3.3% on physician-preference items and 3.9% where buying in high volume: "under transparency for hospitals purchasing PPIs at formerly high prices (3.3% savings) and in relatively high quantities (3.9% savings)". The object of study is the information, not the price level: "we empirically examine the effect of transparency in the form of benchmarking information on prices negotiated by hospitals and their suppliers"Grennan & Swanson (2020), Journal of Political Economy 128(4), 1234–1268 · VoR held, no page citations ship

Grades: A, verified against the printed page of the primary source · B, primary source, text layer only · C, authoritative secondary · D, reported.

From the essay

Pricing & revenue architecture

Tiered pricing is a promise with a cost-to-serve boundary

A tier is sound only when its customer promise, delivery burden, price rule, transition, exception authority, and expiry are explicit.

31 Aug 2026

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APA 7

Isoglu, S. (2026). The tier-promise and cost boundary [Table]. isoglu.com. https://isoglu.com/insights/exhibits/isoglu-2026-tiered-pricing-is-a-promise-with-a-cost-to-serve-boundary-fig01/

BibTeX

@misc{isoglu-2026-tiered-pricing-is-a-promise-with-a-cost-to-serve-boundary-fig01,
  author = {Isoglu, Sinan},
  title = {{The tier-promise and cost boundary}},
  year = {2026},
  howpublished = {Table 1, isoglu.com},
  url = {https://isoglu.com/insights/exhibits/isoglu-2026-tiered-pricing-is-a-promise-with-a-cost-to-serve-boundary-fig01/},
  note = {From the essay {Tiered pricing is a promise with a cost-to-serve boundary}}
}

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  <figcaption>Table 1: The tier-promise and cost boundary. Source: Author&#39;s decision worksheet grounded in Zbaracki et al. (2004), Urbany, Madden and Dickson (1989), Kienzler, Kowalkowski and Kindström (2021), and Grennan and Swanson (2020). Labels are synthetic; no prices, customer terms, or current service data are shown. <a href="https://isoglu.com/insights/exhibits/isoglu-2026-tiered-pricing-is-a-promise-with-a-cost-to-serve-boundary-fig01/">View exhibit</a>.</figcaption>
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