The Impact of Dynamic Pricing Strategies on Operating Profit and Consumer Perceptions of Price Fairness

Abstract

Dynamic pricing, a strategy in which prices are adjusted in real time based on demand, capacity, competitor behavior, and other market signals, has become increasingly common across industries such as transportation, hospitality, and e-commerce. While dynamic pricing offers firms the potential to optimize revenue and operating profit, it also raises concerns regarding consumer perceptions of price fairness, which may in turn affect customer satisfaction and loyalty. This study examines the impact of dynamic pricing strategies on operating profit and consumer perceptions of price fairness, and further investigates whether perceived price fairness moderates the relationship between dynamic pricing intensity and customer loyalty. A quantitative approach was employed using data from 145 consumers who had recently purchased ride-hailing or online travel services that employ dynamic pricing, combined with financial performance data from four service providers. Data were analyzed using multiple linear regression and moderated regression analysis. The results show that dynamic pricing intensity has a positive and significant effect on operating profit, but a negative and significant effect on perceived price fairness. Furthermore, perceived price fairness is fo und to significantly moderate the relationship between dynamic pricing intensity and customer loyalty, such that the negative effect of aggressive dynamic pricing on loyalty is substantially amplified when consumers perceive prices as unfair. These findings suggest that while dynamic pricing can enhance short-term financial performance, firms must carefully manage pricing transparency and communication to mitigate the risk of long-term customer attrition.