Does Demand Fall When Customers Perceive That Prices Are Unfair: The Case Of Premium Pricing for Large Sizes, Marketing Science
We analyze a large-scale field test conducted with a mail-order catalog firm to investigate how customers react to premium prices for larger sizes of women's apparel. We find that customers who demand large sizes react unfavorably to paying a higher price than customers for small sizes. Further investigation suggests that these consumers perceive that the price premium is unfair. Overall, premium pricing led to a 6% to 8% decrease in gross profits.
Eric T. Anderson, Duncan Simester
Anderson, Eric T., and Duncan Simester. 2008. Does Demand Fall When Customers Perceive That Prices Are Unfair: The Case Of Premium Pricing for Large Sizes. Marketing Science. 27(3): 492-500.