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The Pay What You Want pricing strategy applied to digital products: an essay

Author

Listed:
  • Ana Isabel Torres

    (University of Aveiro and INESC TEC)

  • César Lapa Barros

    (Polytechnic Institute of Porto, R. Jaime Lopes Amorim)

  • Amélia Ferreira Silva

    (Polytechnic Institute of Porto)

  • Ricardo Jorge Silva

    (Polytechnic Institute of Porto, R. Jaime Lopes Amorim)

Abstract

This study aims to examine if the pricing strategy “Pay What You Want” can be the best option for the industry of digital products’ distribution, when compared with other fixed prices policies. To verify the adequacy of Pay What You Want Pricing strategy, we conducted an online survey using a sample of online consumers, to evaluate their buying intention and the willingness to pay regarding a set of digital products. Results show that, in some instances, the Pay What You Want Pricing strategy yields a greater sales revenue through the reduction of the individual amounts paid, which is counter-balanced by the increasing number of transactions. We conclude that this pricing strategy is as much suitable for companies, as they may potentially increase their sales revenue.

Suggested Citation

  • Ana Isabel Torres & César Lapa Barros & Amélia Ferreira Silva & Ricardo Jorge Silva, 2022. "The Pay What You Want pricing strategy applied to digital products: an essay," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(5), pages 529-537, October.
    • Handle: RePEc:pal:jorapm:v:21:y:2022:i:5:d:10.1057_s41272-021-00355-6
    DOI: 10.1057/s41272-021-00355-6
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    References listed on IDEAS

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    1. Anja Lambrecht & Avi Goldfarb & Alessandro Bonatti & Anindya Ghose & Daniel Goldstein & Randall Lewis & Anita Rao & Navdeep Sahni & Song Yao, 2014. "How do firms make money selling digital goods online?," Marketing Letters, Springer, vol. 25(3), pages 331-341, September.
    2. Ke-Wei Huang & Arun Sundararajan, 2011. "Pricing Digital Goods: Discontinuous Costs and Shared Infrastructure," Information Systems Research, INFORMS, vol. 22(4), pages 721-738, December.
    3. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    4. J. Yannis Bakos, 1997. "Reducing Buyer Search Costs: Implications for Electronic Marketplaces," Management Science, INFORMS, vol. 43(12), pages 1676-1692, December.
    5. Kanupriya Katyal & Vinay Kanetkar & Sanjay Patro, 2019. "What is a fair fare? Exploring the differences between perceived price fairness and perceived price unfairness," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(2), pages 133-146, April.
    6. Benjamin Edelman & Sonia Jaffe & Scott Duke Kominers, 2010. "To Groupon or Not to Groupon: The Profitability of Deep Discounts," Harvard Business School Working Papers 11-063, Harvard Business School, revised Jan 2014.
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    Cited by:

    1. Egbert, Henrik & Greiff, Matthias, 2023. "Pay-What-You-Want für öffentliche Güter: Eine Fallstudie zu vhs.wissen live [Pay-What-You-Want and Public Goods: a case study of vhs.wissen live]," MPRA Paper 118432, University Library of Munich, Germany.

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