The Roles of Price, Performance, and Expectations in Determining Satisfaction in Service Exchanges

In this article, the authors examine the roles that price, performance, and expectations play in determining satisfaction in a discrete service exchange. The authors maintain that the price fluctuations common to the many service industries that implement demand-oriented pricing, combined with the inherent heterogeneity of service performance, likely result in price-performance combinations that vary widely. Furthermore, the authors propose that the level of price-performance consistency in a service exchange moderates the relationship between performance expectations and subsequent performance and satisfaction judgments. When price and performance are consistent, expectations have an assimilation effect on performance and satisfaction judgments; when price and performance are inconsistent, expectations have no effect on performance and satisfaction judgments. To examine these issues, the authors develop a contingency model that they estimate using data from a multimedia experimental design. The results generally support the contingency framework and provide empirical support for normative guidelines that call for creating realistic performance expectations and offering money-back service guarantees.