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Pay-per-minute pricing: A field experiment comparing traditional and participative pricing mechanisms

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  • Sulser, Pascal A.

Abstract

Several studies have explored the mechanisms that allow customers to participate in the price-setting of products and services. This study contributes to the relevant literature by empirically investigating pay-per-minute pricing in the context of an experience good. Seven hundred forty-two attendees of a temporary science exhibition in Switzerland were randomly allocated to three distinct pricing treatments: pay-per-minute, pay-what-you-want, and fixed pricing. A standardized questionnaire allowed for a comparative evaluation of all three pricing mechanisms. The findings demonstrate that acceptance of pricing mechanisms is influenced by experiential learning; participative pricing is more acceptable to those with firsthand experience. Fixed pricing remains the preferred option for customers to pay; however, pay-per-minute pricing can substantially reduce the average length of stay, without affecting satisfaction with the exhibition and overall shopping expenditure. This finding highlights the potential of pay-per-minute pricing to mitigate congestion issues, which can lead to a reduction in costs. It may also help to enable better social distancing, thus slowing the spread of communicable diseases. Moreover, the inner mechanics of pay-per-minute pricing seem to hold well, as there is a clear relationship between participants enjoying the exhibition and their length of stay.

Suggested Citation

  • Sulser, Pascal A., 2021. "Pay-per-minute pricing: A field experiment comparing traditional and participative pricing mechanisms," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 92(C).
    • Handle: RePEc:eee:soceco:v:92:y:2021:i:c:s2214804321000240
    DOI: 10.1016/j.socec.2021.101684
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    More about this item

    Keywords

    Pay-per-minute; Pay-what-you-want; Fixed pricing; Participative pricing; Experience goods; Consumer behavior; Field experiment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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