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Price fairness and PWYW (pay what you want): a behavioral economics perspective

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  • Jin Young Chung

    (Incheon National University)

Abstract

This study proposes a conceptual framework to clarify what leads to successful implementation of the pay what you want (PWYW) pricing mechanism. Psychological factors from the behavioral economics perspective are included in the framework based on the proposition that they play a role in determining how much a consumer will pay. PWYW refers to a participative pricing model in which a consumer can take full control over the price. The goals of this value-based pricing strategy are in line with the goals of revenue management—increasing the opportunity for greater revenues and higher customer satisfaction by understanding consumers’ perceived value. A meta-analysis of real-world examples identifies components, including price fairness perception that can lead people to pay something greater than zero under PWYW.

Suggested Citation

  • Jin Young Chung, 2017. "Price fairness and PWYW (pay what you want): a behavioral economics perspective," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(1), pages 40-55, February.
    • Handle: RePEc:pal:jorapm:v:16:y:2017:i:1:d:10.1057_s41272-017-0078-0
    DOI: 10.1057/s41272-017-0078-0
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    Cited by:

    1. Vahid Ashrafimoghari & Jordan W. Suchow, 2022. "A Game-theoretic Model of the Consumer Behavior Under Pay-What-You-Want Pricing Strategy," Papers 2207.08923, arXiv.org.
    2. Rabbanee, Fazlul K. & Roy, Rajat & Sharma, Piyush, 2022. "Contextual differences in the moderating effects of price consciousness and social desirability in pay-what-you-want (PWYW) pricing," Journal of Business Research, Elsevier, vol. 141(C), pages 13-25.
    3. Rafael Luis Wagner, 2019. "Lowering consumers’ price image without lowering their internal reference price: the role of pay-what-you-want pricing mechanism," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(4), pages 332-341, August.
    4. Jordi Tena‐Sánchez & Francisco J. León‐Medina & José A. Noguera, 2020. "Empathic cultural consumers: Pay what you want in the theater," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(4), pages 1213-1245, December.
    5. Nikolai Dokuchaev, 2019. "A gap between rational annuitization price for producer and price for customer," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(2), pages 147-154, April.
    6. Nikolai Dokuchaev, 2018. "On a gap between rational annuitization price for producer and price for customer," Papers 1809.08960, arXiv.org.

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