The importance of meeting price expectations: linking price to service quality

Purpose – The purpose of this research paper is to investigate the role of price and price expectations in service quality evaluations based on a study of the US hotel sector. Design/methodology/approach – The paper is based on an experimental study to test service quality and price congruency through randomly assigned treatments to a quota sample of 120 students. Findings – The research shows that the degree to which subjects' price expectations are met influences their evaluations of service quality. This is especially true in the case of a price loss; when the actual price exceeds the expected price. However, when there is a price gain, subjects' evaluations of service quality were not affected. Research limitations/implications – The experiment sacrificed external validity for internal control; an artificial stimulus was used in a carefully controlled experimental setting to control the subjects' exposure to price and service manipulations. A small sample size of student subjects was used; only 20 subjects in each treatment group. The results obtained were based on subjects' evaluation of a written script, and not an actual service encounter. By virtue of using an experimental design, the experiment did not consider a broad range of potential factors. Originality/value – The paper uses an experiment to test the effects of price gains and price losses on consumers' perceptions of the quality of a service encounter.