Fairness in Pricing: Why Transparent Pricing Matters for Customer Loyalty

I have spoken about the ethics of pricing in past articles and blogs. Put simply, companies should be able to earn a fair return for the value they deliver. Companies that do that can invest in training, can develop great working environments, and can focus on employee wellbeing. They can invest in growth, which creates new jobs and career progression. They are resilient, which protects jobs and keeps mortgages paid.

But prices can be too high. For example, price gauging is a terrible practice.

Put simply, customers are happy to pay higher prices if they receive more value, but they expect those prices to be fair.

When prices appear to be set reasonably, customers are more likely to remain or to return, and are more likely to recommend the product or service. Conversely, perceived unfairness can prompt them to share their views with friends, impacting a brand’s reputation and ability to secure new customers.

Let’s take a look at some recent examples where fairness in pricing has been lacking and explore why this is crucial to brand loyalty. 

We’ll start with a very public issue – the price of tickets for the Oasis reunion tour.

Oasis decided to use dynamic pricing for their concert tickets. As tickets went on sale, fans eager to secure their spots were met with a system that adjusted prices in real time based on demand, resulting in skyrocketing prices for many.

For those that secured tickets, even though many paid much more than they planned they will still have a memorable experience and will rationalise the expenditure, making it “worth it” in hindsight. However, fans who couldn’t afford the inflated prices, or who simply missed out, are left with a sense of bitterness and frustration. This perception of unfairness can deter future purchases, as customers begin to question the band’s integrity and whether they’re being valued merely as sources of revenue.

Don’t misunderstand, dynamic pricing is a perfectly reasonable approach. Uber surge pricing, for example, incentivises more taxi drivers to work during busy times which relieves pressure and ensures customers can get a ride when they need it. Hotels or flights can reduce prices close to the date to ensure they are full, rewarding people who are prepared to plan things at the last minute but who might miss out altogether if no rooms/flights are left, and making prices overall lower because they are fully utilising their asset.

The issue with Oasis was that they simply saw a large demand and jacked their prices up massively, which doesn’t feel like they are rewarding their loyal fans. 

And that’s a key point. Loyalty works both ways.

My own example is about mobile phone contracts and broadband contracts.

I am (just about) still with BT for broadband and landline services. Monthly fees have been increasing each year, and I came out of contract very recently following which the fees went through the roof. 

While exploring options, I found Zen Internet offered a comparable service at 40% less than my BT in-contract rate, and 50% less than my out-of-contract rate. When I informed BT of my intention to switch, they offered a retention deal. Yet, my question to them was straightforward: Why should I have to leave to be offered a fair price? In what way is this rewarding loyalty?

Studies on behavioural pricing indicate that customers often feel short-changed when they see newer, more attractive offers marketed to new customers, while their own prices remain high or even increase after contracts expire. Those studies highlight that customers tend to interpret such “loyalty penalties” as a lack of appreciation, which can lead to a breakdown of trust.

There are other examples of pricing practices that customers find unfair, such as:

The event resale market: When events sell out the secondary market takes over, leading to a situation where the original artist’s prices may be seen as fair, but resellers (ticket touts) inflate prices to unfair levels by taking advantage of scarcity.

Subscription auto-renewals: Some companies make it extremely easy to subscribe for a service or magazine, but incredibly difficult to unsubscribe.

The bottom line is that fairness is important. Customers will pay a higher price for something if they think they are receiving reasonable value – in other words, if it is fair. But they hate the feeling of being exploited or ripped off, and will punish companies that do that by leaving (so the company now has the cost of acquiring new customers) and/or by telling everyone else about their experience (which impacts brand perception and makes new customer acquisition harder).