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Determinants of consumers' response to pay-what-you-want pricing strategy on the Internet

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  • Weisstein, Fei L.
  • Kukar-Kinney, Monika
  • Monroe, Kent B.

Abstract

Previous pay-what-you-want pricing research has focused primarily on services in brick-and-mortar settings wherein buyers decide on a price to pay after experiencing the service. Research on this pricing approach in online settings is rare and limited to products, such as digital music. This paper explores the effects of pay-what-you-want pricing on the Internet and extends the scope of investigation to tangible products purchased before consumption. Building on theories in communications and pricing, the authors identify and empirically test two factors that interact with brand familiarity to positively influence online shoppers' responses to pay-what-you-want pricing: a virtual product experience and a seller-supplied anchor price. The results further indicate that consumers' online purchase intentions are influenced primarily by their perceived product knowledge, while perceived quality influences their pay-what-you-want prices.

Suggested Citation

  • Weisstein, Fei L. & Kukar-Kinney, Monika & Monroe, Kent B., 2016. "Determinants of consumers' response to pay-what-you-want pricing strategy on the Internet," Journal of Business Research, Elsevier, vol. 69(10), pages 4313-4320.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:10:p:4313-4320
    DOI: 10.1016/j.jbusres.2016.04.005
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    References listed on IDEAS

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    Cited by:

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    2. 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.
    3. Wang, Cindy Xin & Yuan, Hong & Beck, Joshua T., 2022. "Too tired for a good deal: How customer fatigue shapes the performance of Pay-What-You-Want pricing," Journal of Business Research, Elsevier, vol. 144(C), pages 987-996.
    4. Reisman, Richard & Payne, Adrian & Frow, Pennie, 2019. "Pricing in consumer digital markets: A dynamic framework," Australasian marketing journal, Elsevier, vol. 27(3), pages 139-148.
    5. Narwal, Preeti & Nayak, J.K., 2020. "How consumers form product quality perceptions in absence of fixed posted prices: Interaction of product cues with seller reputation and third-party reviews," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).
    6. Maksim Godovykh & Carissa Baker & Alan Fyall, 2022. "VR in Tourism: A New Call for Virtual Tourism Experience amid and after the COVID-19 Pandemic," Tourism and Hospitality, MDPI, vol. 3(1), pages 1-11, February.
    7. Preeti Narwal & J. K. Nayak, 2020. "Investigating relative impact of reference prices on customers’ price evaluation in absence of posted prices: a case of Pay-What-You-Want (PWYW) pricing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(4), pages 234-247, August.
    8. Gerpott Torsten J., 2016. "A review of the empirical literature on Pay-What-You-Want price setting," Management & Marketing, Sciendo, vol. 11(4), pages 566-596, December.
    9. 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.
    10. Rathore, Himanshu & Jakhar, Suresh Kumar & Kumar, Satish & Kumar, Madhumitha Ezhil, 2022. "Pay-what-you-want versus pick-your price: The interplay between participative pricing strategies and consumer's need for cognition," Journal of Business Research, Elsevier, vol. 141(C), pages 73-84.
    11. Weisstein, Fei L. & Choi, Pilsik & Andersen, Peter, 2019. "The role of external reference price in pay-what-you-want pricing: An empirical investigation across product types," Journal of Retailing and Consumer Services, Elsevier, vol. 50(C), pages 170-178.
    12. Ni Wayan Masri & Athapol Ruangkanjanases & Shih-Chih Chen, 2020. "The Effects of Product Monetary Value, Product Evaluation Cost, and Customer Enjoyment on Customer Intention to Purchase and Reuse Vendors: Institutional Trust-Based Mechanisms," Sustainability, MDPI, vol. 13(1), pages 1-20, December.

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