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Has Revenue Management become Acceptable?

Findings from an International Study on the Perceived Fairness of Rate Fences

Cornell University

Jochen Wirtz

National University of Singapore

Demand-based pricing is underused in many service industries, because customers are believed to perceive such pricing as unfair. Fencing can be highly effective in improving the perceived fairness of demand-based pricing. In this study, five fences were explored in a restaurant context across three countries (Singapore, Sweden, and the United States). Demand-based pricing in the form of coupons (two for the price of one), time-of-day pricing, and lunch/dinner pricing were perceived as fair. Weekday/ weekend pricing was seen as neutral to slightly unfair. Table location pricing was seen as somewhat unfair with potential negative consumer reactions to this practice. Furthermore, framing demand-based pricing as discounts improved perceived fairness. The findings were largely consistent for the three countries. Specifically, framing demand-based pricing as discounts or gains showed no country-specific effect.

Key Words: revenue management • pricing • perceived fairness • international • restaurants

Journal of Service Research, Vol. 6, No. 2, 125-135 (2003)
DOI: 10.1177/1094670503257038


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