Prior research suggests that consumers are forgiving of a price increase that is commensurate with increased vendor costs. We argue that the perceived fairness of the price increase will also depend on the alignability of the cost and price increases, such that alignable increases will be perceived as more acceptable than nonalignable increases. Moreover, we predict that when a cost increase is non-alignable, consumers will be more receptive to a service price increase than a goods price increase. Evidence from a series of experiments supports both predictions.
All Science Journal Classification (ASJC) codes
- Business and International Management
- Arts and Humanities (miscellaneous)
- Economics and Econometrics