"Proposition 5: Managerial overemphasis on customer price fairness perception is negatively related to the extent to which firms practice value-based pricing."
"“[P]erhaps few ideas have wider currency than the mistaken impression that prices are or should be determined by costs of production”. The prevalence of this notion is perhaps surpassed only by the incorrect perception among both customers and suppliers that cost-based prices are fair. Research in psychology suggests that egocentrism leads to biased fairness judgments —a proposition corroborated by marketing research on price fairness.
As deviations from the norm also have a negative influence on price fairness perception, the predominant focus on cost-based pricing in many industries may better explain the biased per- ception of value-based pricing as unfair.
Pricing, then, should be based on value rather than costs. Drawing on service-dominant logic ... pricing is a co-creational practice, characterizing it as
“a negotiation process in which buyers and sellers jointly assess the value in context for the buyer. In this process, prices eventually get influenced by various customer resources, including their ability to trust the seller, anticipate future transactions (‘give now, take later’), argue about price fairness, and resolve conflicts.”
As pricing is based on both parties' joint evaluation, such practices allow both buyer and seller to capture a fair share of value. Nevertheless, firms seem concerned that customers view practices that emphasize value-based pricing as unfair."