How consumers perceive “fair” price hikes

Inflation pressures are hitting businesses across the globe, which may mean your company is reviewing its pricing strategies. While this makes sense, it is equally important to review your understanding of your customer base.

Remember, inflation pressures are hitting households as well, and customers are becoming very vocal when they are unhappy, so it’s important to know what your customers perceive as “fair”.

There are three principles involved in perceived price fairness (Urbany, Madden, Dickson, 1989):

1. Maintaining profits: consumers believe it is fair for companies to raise prices to maintain profits.

If your company is feeling the squeeze of inflation, perhaps figure out a way to communicate that to your customer base.

2. Increasing profits: Consumers think it is unfair to raise prices to increase profits.

If your company has been…