This paper reviews service quality and pricing and their impact upon customer satisfaction and loyalty. Customer loyalty initiatives are used by companies to try to encourage repeat business, provide opportunities to cross sell and enhance revenue potential. Consequently, theories of
service quality, pricing and customer loyalty are discussed. The use of a loyalty scale to measure the level of customer loyalty development as the first stage in a two stage mixed methods design is outlined. However, this paper is about the second stage of the research using findings from
a series of focus groups concentrating on the moderating effect that three different levels of customer loyalty development have on perceptions of service quality and price. The study is set within the passenger ferry sector. The paper concludes by discussing the moderating effect of levels
of customer loyalty development on perceptions of service quality and price and presents implications for service managers.