What is a fair fare? Exploring the differences between perceived price fairness and perceived price unfairness

Abstract

Price is the cost consumers pay to stay with the manufacturer. In turn, the firms should make the consumers feel that their sacrifice is fair. Marketers should understand the differences between price fairness and unfairness. Most research manipulates causes price unfairness and assumes reverse is fairness. We study overall price (un)fairness as an aggregate of distributive, procedural, informational, and interpersonal justice and study what differences exist between price fairness and unfairness. Consumer’s sense of equity from the transaction and their understanding of the pricing policy contribute equally toward creating price fairness perceptions. Violation of equity has the greatest impact on price unfairness perceptions, followed by consumer's inability to understand procedures. For services, both distributive and procedural dimensions are equally important. Consumers display stronger preference to stay with the service provider in case of fair price perceptions than their preference to leave because of unfairness. Customers show a status quo bias. Positive communication influences them to repurchase.