An Insight into Pay-what-you-want Pricing
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Purpose: Extant literature on pricing posits that consumers’ internal reference price (IRP) drives willingness to pay (WTP), when external pricing cues are available. This positive IRP–WTP relationship is further moderated by involvement and price consciousness. The current research was designed to test how the IRP–WTP relationship will be moderated by involvement and price consciousness, albeit in the pay-what-you-want (PWYW) context. In the PWYW setting consumers can pay any amount of money (including nothing) and no external pricing cues are provided. Design/methodology/approach: A survey was engaged to measure the key variables, and the data was analysed using hierarchical multiple regression with spotlight analyses. Findings: In the normal everyday pricing context, involvement strengthens the IRP–WTP relationship, while price consciousness weakens it. Contrary to this normal pricing wisdom, in the PWYW context, it was found that both involvement and price consciousness weaken the IRP–WTP relationship, thereby driving down consumers’ WTP. Research limitations/implications: Future studies should use experimental design to manipulate some of the independent variables used in the study, focus on the mediating processes that underlie PWYW decision-making and extend the findings in the context of wider demographics. Practical implications: Managers should focus on segmentation, branding and product experiences to ensure higher returns of PWYW businesses. Originality/value: This paper addresses lack of overall research in the PWYW area, and also addresses some key gaps left by extant research of Kim, Natter and Spann (2009) that was published in the Journal of Marketing.
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Roy, R.; Rabbanee, Fazlul (2016)Pay What You Want (PWYW) is a type of participative pricing mechanism where the buyer can offer any price including a price of zero; and the seller has to accept the price without withdrawing the product offer. Although ...
Exploring the Differences in Pay-What-You-Want Pricing between Products and Services: Interactive Effects of Product Knowledge, Social Visibility and TangibilityRoy, R.; Rabbanee, Fazlul ; Sharma, Piyush (2016)Pay-what-you-want (PWYW) is a unique participative pricing mechanism in which the buyers can pay nothing or pay any price they want and the seller has to accept it without being able to withdraw the offer (Kim et al., ...
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