“I will pay you more, as long as you are transparent!”: An investigation of the pick-your-price participative pricing mechanism

Participative pricing strategies are increasingly common nowadays. In addition to have an impact on consumers’ purchase decision, these pricing strategies can impact consumers’ brand evaluations. This paper is an investigation of the Pick-Your-Price (PYP) strategy, which is the most novel participative pricing approach. Adopting a mixed-method approach, we shed light on consumers’ perceptions of the PYP and evaluate the impact of a possible configuration of the PYP (i.e. featuring a default price optionarchitecture) on brand evaluations and purchase choice. We find that when the default is placed on the highest price, consumers ascribe negative causal attribution to the company which, in turn, will result in more negative brand attitudes. Interestingly, introducing price transparency improves causal attributions and brand attitudes as well as the estimated revenues for the company. Moreover, we also test the impact of defaults in the context of communicating different Corporate Social Responsibility practices (internal vs. external) finding that the communication of external CSR stimulates more positive brand attitudes and, in turn, higher willingness to purchase in PYP settings. This study represents one of the first explorations of the PYP strategy, providing interesting managerial implications for marketers willing to experiment with it.