Integrating fairness into Business Models

Undoubtedly, Ola is cheaper! One cant but feel the sanguine happiness with app based cabs after experiencing haggling with rapacious Auto-rickshaws and Yellow-Black taxis. But, Ola’s peak hour fare multipliers leaves us wondering if our karma is catching up? Are we condemned to suffer? Or will a sense of fairness from operators, even if market enforced, will eventually come to the rescue?

I used to pay Rs. 500 for rides back from airport to residence using FastTrack – a taxi-fleet operator – cursing often the fleece. Ola offered rides back home from Airport at about Rs. 200! I switched. So did several others. But recently when I landed at Chennai airport at midnight and ordered a Ola cab, the app asked me to confirm a 1.5x fare multiplier. The reason was ostensibly to motivate more taxis to operate at that hour so that at least I am not stranded. I promptly closed the app and retried. Same message. I closed and took FastTrack at Rs. 500/- instead!

Now, you may think I am quite irrational having paid Rs. 200/- more to FastTrack, when 1.5x times would have been still about Rs. 300? But at that minute I felt being unfairly treated…being taken advantage of…even feeling blackmailed. I am sure several others have felt somewhat similar. Worse – that feeling of having been blackmailed – lingers even today. Such unfair price practices occur in several other areas too: airline tickets, “tatkal fares” of Indian Railways, hotel reservations, etc.

Fairness is a component that needs to built into every business model as a fundamental strategy. Otherwise, consumers will treat business with contempt and at the first available opportunity switch. Consumers may, at times, switch even at his/her expense.

How does one integrate fairness in such business models? One may consider usual pricing for regular consumers. In fact, I think this will be one of the best techniques to increase loyalty base.

Let me know if there are other techniques?

One Comment

  1. Brilliant comment. What is fair is a function of previous consumer experiences or references. While one may consider published govt. night-fares-multiplier of 1.5 times as source to compare, that was reset by Ola charging usual rates in most nights. Ola upped it suddenly one night by 1.5x (or even at times 3X recently) stating cabs were few. I had the same feeling when milk got vended 10x the usual price during recent Chennai floods. Supply constraint is not a fair explanation for price increases.

    What you say about sources of fairness differing from business to business is also true. They may be though abstracted to three “references” – that of price, effort and time spent – the only three that a consumer spends and the cost side of the value equation. E.g. one will consider it very unfair if you were made to wait at a doctor’s clinic for much more than the usual time and you don’t know the reason.


Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *