Examining antecedents of customer pay-what-you-want payments in e-commerce

E-commerce is flourishing globally, with more and more organizations developing e-commerce applications and opting for pay-what-you-want (PWYW) as an innovative pricing strategy. Although customers behave differently online (compared to offline) and commonly buy tangible products in this context, prior research on PWYW mainly focused either on offline settings or on the distribution of digital music content (i.e., an intangible product). Therefore, the purpose of this paper is to examine, drawing on signaling theory, the effects of three signaling cues on customer PWYW online payments for tangible products and the mediating effect of trust and risk perceptions. Two-hundred fifty-five adult consumers participated in a 2 (virtual product experience versus no virtual product experience) × 2 (warranty versus no warranty) × 2 (product review versus no product review) between-subjects experiment. The results indicate that offering a product warranty, an online user review, and—to a greater extent—a virtual product experience positively influence customer PWYW online payments for a tangible product. Furthermore, all three signals influence the price that customers want to pay because of enhanced trust regarding the e-vendor rather than reduced risks. The findings provide e-commerce managers with relevant insights to refine their digital strategy, influence customer online trust, and ultimately benefit from PWYW. This research contributes to the literature with an extension of current PWYW research by examining the antecedents of customer PWYW payments for tangible products in an online setting.