Transparent shield protecting customers from fluctuating prices

Decoding Customer Dissatisfaction: Can Transparency Tame the Tariff Beast?

Theo Raines in Business & Economy August 2025 • 4 min read.

"Explore how tariff transparency can be a game-changer in the hospitality industry, turning potential customer frustration into loyalty and satisfaction. Is it the secret ingredient to service success?"

In today's competitive service industry, businesses are constantly seeking ways to stand out and maintain profitability. One common tactic is tariff modulation (TM), also known as dynamic pricing, where prices fluctuate based on demand and other factors. While TM can optimize revenue, it often leads to customer dissatisfaction (DIS) if not handled carefully. Think about booking a hotel room and noticing the price changes depending on the day or event. That feeling of 'am I getting a fair deal?' is exactly what businesses want to avoid.

Transparency of tariff information (TTI) has emerged as a powerful tool to combat the negative effects of TM. By openly communicating the reasons behind price changes, companies can build trust and mitigate customer frustration. Essentially, it's about showing your hand and explaining why prices aren't always consistent. But does transparency always work? And how does it interact with dynamic pricing to truly impact customer satisfaction?

A recent study in Tunisia's hospitality sector sheds light on this complex relationship. Researchers delved into how TTI influences the connection between TM and DIS, exploring whether transparency consistently reduces dissatisfaction or if other factors are at play. The findings offer valuable insights for businesses looking to implement dynamic pricing strategies without alienating their customer base, especially for younger audience.

The Transparency Shield: How Open Pricing Can Reduce Dissatisfaction

Transparent shield protecting customers from fluctuating prices

Tariff modulation, while beneficial for revenue management, can trigger negative customer perceptions. This stems from two main psychological principles:

Reference Price Theory: Customers often compare current prices to past experiences or expectations. If a price deviates significantly from their reference point, it can lead to feelings of being overcharged.
Fairness Theory: People assess transactions based on the perceived balance between what they receive (the 'gain' component) and what they sacrifice (the 'give' component). Dynamic pricing can feel unfair if customers don't understand the rationale behind the fluctuations.

TTI steps in as a potential solution by addressing these concerns. When businesses are transparent about why prices change, customers are more likely to view the pricing as justified and fair. This, in turn, reduces dissatisfaction and fosters a sense of trust. Think of it like this: if a hotel explains that prices are higher during a major festival due to increased demand, customers are more likely to accept the premium.

Turning Insights into Action: Practical Tips for Businesses

This research underscores that transparency isn't just a nice-to-have; it's a crucial element for successful dynamic pricing strategies. By embracing open communication and tailoring your approach to different customer segments, you can transform potential dissatisfaction into lasting loyalty. It's about creating a win-win situation where businesses optimize revenue while customers feel valued and respected. Make tariff transparency not just a policy, but a core part of your brand promise.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

Everything You Need To Know

What is tariff modulation and why might it lead to customer dissatisfaction?

Tariff modulation, also known as dynamic pricing, is a strategy where prices fluctuate based on factors like demand. While it can optimize revenue, it often leads to customer dissatisfaction if not handled carefully. This is because customers may feel they aren't getting a fair deal if they observe prices changing without understanding why. This can be explained by Reference Price Theory, where customers compare current prices to past experiences, and Fairness Theory, where people assess the balance between what they receive and what they sacrifice.

How can transparency of tariff information (TTI) help to reduce customer dissatisfaction related to dynamic pricing?

Transparency of tariff information (TTI) addresses concerns related to tariff modulation (TM) by openly communicating the reasons behind price changes. This helps customers view pricing as justified and fair, which reduces dissatisfaction and fosters trust. For example, explaining that hotel prices are higher during a festival due to increased demand can make customers more accepting of the premium.

What are the key psychological principles that explain why tariff modulation can lead to negative customer perceptions?

Two key psychological principles explain negative customer perceptions of tariff modulation: Reference Price Theory and Fairness Theory. Reference Price Theory suggests customers compare current prices to past expectations, leading to dissatisfaction if there's a significant deviation. Fairness Theory highlights that people assess transactions based on the balance between what they receive and what they sacrifice, and dynamic pricing can feel unfair if the rationale behind it isn't clear.

How does research in the Tunisian hospitality sector contribute to our understanding of transparency and tariff modulation?

Research in the Tunisian hospitality sector sheds light on the relationship between transparency of tariff information (TTI), tariff modulation (TM), and customer dissatisfaction (DIS). This research explores whether transparency consistently reduces dissatisfaction or if other factors are at play, providing insights for businesses looking to implement dynamic pricing strategies without alienating their customer base. It highlights the importance of understanding how TTI influences the connection between TM and DIS in a real-world setting.

Beyond simply stating prices, what practical steps can businesses take to make tariff transparency a core part of their brand promise?

Businesses should embrace open communication about pricing rationale and tailor their approach to different customer segments. Transparency of tariff information isn't just about showing prices; it's about explaining the 'why' behind them to create a sense of fairness and trust. This can include explaining the factors that influence tariff modulation (like demand, seasonality, or special events) and ensuring that customers feel valued and respected, turning potential dissatisfaction into lasting loyalty. By making tariff transparency a core part of the brand promise, businesses can create a win-win situation where they optimize revenue while maintaining customer satisfaction.