ABSTRACTResearch in marketing and pricing has focused primarily on consumer perceptions of goods prices. Relatively little research has been clone on consumer perceptions of service prices. However, within the context of services, prices tend to be complex, often consisting of many different components and attributes. The complexity of service prices may therefore make them difficult for consumers to evaluate. This paper investigates how consumers form their price perceptions of service prices, and how these perceptions may vary from their objective rational values. Results from a controlled experiment suggest that depending on the way in which the price is communicated, consumers may have considerable difficulty in evaluating service prices objectively, leading to systematic errors in their price perceptions. Managerial implications on service price advertising are discussed.