Understanding and enhancing price fairness perceptions of value-based pricing

Value-based pricing is potentially beneficial for relationships in business markets, but customers may also perceive this pricing approach as unfair. Drawing on the dual entitlement principle, we find that pricing norms play a role in fairness perceptions of value-based pricing. We find that fairness perceptions of value-based pricing can be enhanced by transparent and consistent sharing of customer value. Explicitly applying the identical value-sharing rule when promising customer value ex-ante and achieving it ex-post significantly increases price fairness perceptions. We find the same effect when applying the identical value-sharing rule for the focal customer and other customers, even if this leads to higher prices for the focal customer. This study shows specific ways how the dual entitlement principle forms price fairness perceptions.