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

Abstract

In a Pay What You Want (PWYW) setting companies empower their customers to fix the prices buyers voluntarily pay for a delivered product or service. The seller agrees to any price (including zero) customers are paying. For about ten years researchers empirically investigate customer reactions to and economic outcomes of this pricing method. The present paper distinguishes PWYW from other voluntary payment mechanisms and reviews 72 English-or German-speaking PWYW publications, which appeared between January 2006 and September 2016 and contain 97 independent empirical data sets. Prior PWYW research is structured with the help of a conceptual framework which incorporates payment procedure design, buyer, seller, focal sales object and market context characteristics as factors potentially influencing customer perceptions of the PWYW scheme and their behavioral reactions to PWYW offers. The review discusses both consistent key findings as well as contradictory results and derives recommendations for future empirical PWYW research efforts.

The influence of external reference price strategies in a nonprofit arts organization's “pay‐what‐you‐want” setting

“…PWYW is a popular pricing method and study object in marketing and management research (Gerpott, 2017). It is a pricing mechanism where the seller does not rely on a fixed price but rather the customers actively decide what price they find appropriate and want to pay.…”

“…Gerpott (2017) concludes that the results on external reference prices in a PWYW setting are ambiguous, and there is a need for theory‐grounded empirical PWYW studies. In particular, Johnson and Cui (2013) call for studies to investigate detected biasing effects caused by external reference prices in a nonprofit PWYW setting.…”

“…Second, with this study, we aim at overcoming a methodological drawback of recent PWYW research. So far, most research has evaluated PWYW in student samples and in fictitious purchase scenarios, in which only claimed intentions to pay are measured (Gerpott, 2017). The majority of existing studies analyze just one specific buyer group, which makes deriving valid and general conclusions highly controversial.…”

Determinants in Pay-What-You-Want Pricing Decisions—A Cross-Country Study

“…Gerpott [32] provided a comprehensive overview of empirical studies in the field of participative pricing. Based on that overview, the present study is relevant for several reasons.…”

The Pay-What-You-Want game: What can be learned from the experimental evidence on Dictator and Trust Games?

“…Greiff and Egbert (2016), Krzyżanowska and Tkaczyk (2016), and more recently Gerpott (2016Gerpott ( , 2017 review the empirical studies on PWYW pricing between 2009 and 2016. A subset of the studies summarized by Greiff and Egbert mention the DG or the TG, and some elaborate on the link between PWYW pricing and the experimental literature.…”