Paying before consuming: Examining the robustness of consumers’ preference for prepayment

Prior research on consumers’ preference for timing of payment suggests that consumers prefer to prepay for certain kinds of purchases (e.g., vacations) and postpay for others (e.g., washer dryers). This research extends this finding by first comparing preference for timing of payment for products that vary by type (hedonic vs. utilitarian) and durability (nondurable vs. durable) to reveal that it is only hedonic-nondurable products that elicit a preference for prepayment (study 1). The two studies that follow examine the robustness of the prepayment preference by (1) varying the favorability of the transaction (study 2), and, (2) by eliminating the choice of payment timing from the transaction (study 3). Results reveal that the preference for prepayment for hedonic-nondurable goods is robust when transaction characteristics are favorable but shifts when transaction characteristics are unfavorable. Furthermore, when the choice of payment timing is not offered, consumers become indifferent towards when they prefer to pay for hedonic-nondurable products. The implications of these findings for marketers and retailers are discussed.