The impact of dynamic bundling on price fairness perceptions

With the increased availability of consumer-specific data and the ease of changing prices, firms more frequently use dynamic pricing where products are priced at an individual level based on individual consumer information. Dynamic pricing can effectively extract consumer surplus and increase firm profitability. However, it also arouses consumer unfairness perceptions. Three studies demonstrate that the use of bundling in combination with dynamic pricing (dynamic bundling) can reduce consumer unfairness perceptions. The negative effects of dynamic pricing are mitigated by bundling. A bundle enhances perceived transaction dissimilarity thereby reducing consumers’ comparison intentions leading to greater price fairness perceptions.