Determinants of consumers' response to pay-what-you-want pricing strategy on the Internet

Pay-What-You-Want pricing: An integrative review of the empirical research literature

“…Firstly, the cited conclusion neglects the results of several PWYW studies, which detect no significant associations between the level or the use of external RP and prices paid (Gautier & Van der Klaauw, 2012 (in case of self-selected PWYW participation of customers); Gneezy et al, 2012;Hildenbrand et al, 2016; (in case of field studies on actual prices paid); Weisstein et al, 2016) or even find significantly negative correlations, particularly if the external RP was displayed as a minimal threshold value (Johnson & Cui, 2013; (study 12a); Kunter & Braun, 2013;Racherl et al, 2011;Roy et al, 2016a;Thomas & Gierl, 2014). Secondly, it ignores that significantly positive effects of external RP are mainly observed in studies which are highly problematic in terms of their methodology, because they focus on hypothetical payments of students, whereas field studies of real purchases almost never report such effects (Jung et al, 2016, p. 356).…”

“…However, in a situation, in which buyers perceive external RP as being unfair, implausible, extreme outliers and not cost-oriented, such external RP effects should be absent or even become negative (Gautier & Van der Klaauw, 2012;Greiff & Egbert, 2016;Johnson & Cui, 2013;Kim et al, 2014a;Krawczyk et al, 2015;León et al, 2012;Weisstein et al, 2016). Fairness perceptions of external RP under PWYW conditions should, in turn, to a large extent depend on the image of sellers from the perspective of buyers (see below section 3.3).…”

A review of the empirical literature on Pay-What-You-Want price setting

“…For instance, from a theoretical viewpoint, it is to be expected that new products or services, for which consumers experience considerable difficulties in assessing their quality and which are sold under PWYW conditions, are purchased by a lower share of potential customers and are characterized by a larger variance of the prices paid voluntarily for them than established goods whose quality is well know to prospective buyers. The PWYW studies of Sleesman and Conlon (2016) and Weisstein et al (2016) contain some support for this proposition. The expected differences can be explained by information gaps and resulting uncertainty of consumers, who are heavily influenced by characteristics of the goods sold in a PWYW setting (Greiff et al, 2014).…”

“…Firstly, the cited conclusion neglects the results of several PWYW studies, which detect no significant associations between the level or the use of external RP and prices paid (Gautier and Van der Klaauw, 2012 (in case of self-selected PWYW participation of customers); Gneezy et al, 2012;Hildenbrand et al, 2016; (in case of field studies on actual prices paid); Weisstein et al, 2016) or even find significantly negative correlations, particularly if the external RP was displayed as a minimal threshold value (Johnson and Cui, 2013; (study 12a); Kunter and Braun, 2013;Racherla et al, 2011;Roy et al, 2016a;Thomas and Gierl, 2014). Secondly, it ignores that significantly positive effects of external RP are mainly observed in studies which are highly problematic in terms of their methodology, because they focus on hypothetical payments of students, whereas field studies of real purchases almost never report such effects (Jung et al, 2016, p. 356).…”

“…-Fairness of external RP: If customers are convinced that the external RP quoted by sellers are fair, credible or plausible in the sense that they reflect standard fixed prices currently charged for the focal good in the relevant market or average PWYW amounts paid by other buyers or the good's direct production costs with sufficient precision, then the external RP level should have positive impacts on offer acceptance rates and voluntary payment amounts. However, in a situation, in which buyers perceive external RP as being unfair, implausible, extreme outliers and not cost-oriented, such external RP effects should be absent or even become negative (Gautier and Van der Klaauw, 2012;Greiff and Egbert, 2016;Johnson and Cui, 2013;Kim et al, 2014a;Krawczyk et al, 2015;León et al, 2012;Weisstein et al, 2016). Fairness perceptions of external RP under PWYW conditions should, in turn, to a large extent depend on the image of sellers from the perspective of buyers (see chapter after next).…”