Price fairness: Should you change the price, the offer or the explanation?

Choose a response to a fairness objection by separating a misunderstood offer, an unacceptable trade-off and an explanation customers don't trust. Each gives the brand a different problem to solve before changing the price.

A clearer description can help someone understand what they're paying for. Whether they regard the change as reasonable, can afford it or would buy it remains a question for the research.

Morrowfield, a fictional laundry-detergent brand, needs to cover higher costs. Its commercial team is considering a higher price for the same 30-wash box or a smaller 24-wash box at today's shelf price. All brand offers, costs and calculations in the worked example below are illustrative planning inputs; there are no Morrowfield customer findings.

What the original fairness research actually measured

In Kahneman, Knetsch and Thaler's 1986 paper, a hypothetical hardware store raised a snow shovel's price from $15 to $20 after a major snowstorm. Of 107 respondents, 82% judged the action unfair. The underlying telephone surveys were conducted in Toronto and Vancouver in 1984–85. They measured judgments about described actions, rather than purchases at those prices. The original paper reports the question, response scale and eligible base.

Across its scenarios, the paper examined the previous transaction, the consequences for buyers and firms, and the reason for the change. Its findings give Morrowfield a reason to investigate what customers use as their reference and what they think caused the increase. They don't predict today's detergent buyers' response or supply a universal fair percentage increase.

Keeping the shelf price changes the price per wash

Morrowfield's current 30-wash box has an $18 shelf price. The formula, standard dose and retailer stay the same in both proposals. Before the cost rise, the brand receives $12 after retailer terms and incurs $7 in variable costs, leaving $5 contribution. At the new $8.20 variable cost, keeping that offer would leave $3.80.

The team has two feasible replacements. The retailer terms and supplier quotes in this example give both the same $5 contribution per box.

These shelf prices use the same tax basis; actual consumer materials must show the locally applicable purchase price. Both packs are available in-store without a membership or minimum basket. The labeled standard-wash definition stays the same across boxes.

The smaller pack preserves the cash amount needed today, while providing six fewer washes. A customer might prefer that lower outlay and understand the quantity change fully. Another might regard the same shelf price as a poor exchange for less detergent. The commercial team needs to hear both interpretations before choosing the pack.

The 25% unit-price increase is arithmetic. It doesn't establish that customers will judge the smaller pack less fair or buy fewer boxes. Equally, restoring the brand's old contribution doesn't establish that customers will accept either change.

The explanation needs a fact the business can support

Morrowfield can truthfully explain that the cost of making and delivering the product has risen, if its records support that statement. It can also say exactly when the new price begins and whether the formula or quantity changes.

A draft for the full-size box might read: “The cost of making and delivering this box has increased. From December 1, the same 30-wash box will cost $20.” The date belongs to this proposed example, not an announced brand policy.

That sentence leaves room for a customer to disagree. It doesn't claim improved performance, promise that the increase is temporary or suggest that every dollar goes to a supplier. Those would require their own facts. If the business wants to make such a commitment, settle it before testing the wording.

For the smaller pack, the new quantity needs equal attention: “24 standard washes for $18.” Describing it as the familiar $18 box while making the reduction hard to notice would prevent the team from learning whether buyers understand the actual offer.

Two comparisons answer the commercial question

First, compare the full-size $20 box with the 24-wash $18 box using clear, factual descriptions. Include today's pack as a reference so existing buyers can see what changes. Recruit relevant detergent shoppers, and keep current Morrowfield buyers identifiable because they have a previous transaction to compare with the proposal.

Give each person one proposed replacement first. Ask them to explain the quantity, shelf price and expected number of washes before prompting them with fairness language. Then collect the fairness judgment on a fully labeled scale, the alternative they would choose and the reason for that choice. Keep inability to afford the bill distinct from misunderstanding the pack.

One proposed question is: “How fair or unfair do you consider this change?” Offer “Very fair,” “Somewhat fair,” “Neither fair nor unfair,” “Somewhat unfair,” “Very unfair” and “Not sure.” Retain every category in the readout, including uncertainty, and report item nonresponse separately. Ask “What led you to that answer?” before suggesting possible reasons.

Second, test the explanation for the offer the team is genuinely willing to sell. For the full-size box, independently compare the same $20 offer with a straightforward change notice or with the additional, supported cost explanation. Hold quantity, price, effective date and presentation steady. Otherwise, a response difference could come from a different deal.

The order matters: asking about rising manufacturing costs before anyone sees the box may supply the very justification the test is supposed to evaluate. AAPOR's questionnaire guidance addresses question-order effects, neutral wording and balanced response options.

A usable readout keeps three questions separate

An improvement in fairness ratings after the explanation would support that communication decision under the tested conditions. It wouldn't establish that the $20 box meets the required buying or contribution outcome. A favorable choice score would leave actual purchasing unresolved too.

Sapien can help compare how a defined simulated audience interprets the two packs and explore the objections behind the proposed explanations. That gives the team specific questions to take into customer research. Actual customer fairness judgments require customer evidence, and transactions answer what buyers pay. Our message testing guide develops the link between an interpretation and a concrete copy revision.

The objection should determine the response

If buyers miss the quantity reduction, improve its visibility and retest understanding. If they understand the offer but prefer the larger box despite its higher bill, reconsider the smaller pack. If both offers are understood and rejected because the total commitment is too high, a better cost explanation may leave the commercial problem intact.

For Morrowfield, the useful result names the offer the team should develop, the explanation it can honestly use and the buying outcome still needed to justify rollout. Our price-increase research guide works through the separate contribution and retention decision. Fairness research earns its place by showing which part of the proposed change needs work before the brand asks customers to pay it.