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Power and the appeal of the deal: how consumers value the control provided by Pay What You Want (PWYW) pricing

Author

Listed:
  • Michael J. Barone

    (University of Louisville)

  • T. J. Bae

    (Hofstra University)

  • Shanshan Qian

    (Towson University)

  • Jason d’Mello

    (Loyola Marymount University)

Abstract

The current research offers a number of novel findings regarding how individuals respond to Pay What You Want (PWYW) pricing, a strategy that affords consumers complete control over prices. Two experiments integrate research on consumer power into the PWYW literature to show that PWYW’s influence arises primarily with respect to low-power consumers who use PWYW’s pricing control to regulate their power states. Specifically, PWYW is shown to promote stronger intentions to purchase and to recommend a product than fixed pricing, particularly for low- versus high-power consumers. Supporting the notion that PWYW offers the powerless a platform for power elevation, experiment 2 reveals that the more favorable responses of low-power consumers to PWYW are accompanied by increased feelings of self-reliance. Further suggesting that low-power consumers value the pricing control afforded by PWYW for power regulation, the effects are not attributed to differences in the amounts that low- and high-power consumers are willing to pay under PWYW. In addition to providing a deeper understanding of PWYW pricing, the present work extends the power literature by demonstrating that power restoration can transpire not only from the possession of certain products but also through the pricing mechanism by which such products are obtained.

Suggested Citation

  • Michael J. Barone & T. J. Bae & Shanshan Qian & Jason d’Mello, 2017. "Power and the appeal of the deal: how consumers value the control provided by Pay What You Want (PWYW) pricing," Marketing Letters, Springer, vol. 28(3), pages 437-447, September.
    • Handle: RePEc:kap:mktlet:v:28:y:2017:i:3:d:10.1007_s11002-017-9425-6
    DOI: 10.1007/s11002-017-9425-6
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    References listed on IDEAS

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    Cited by:

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    2. Preeti Narwal & J. K. Nayak & Shivam Rai, 2022. "Assessing Customers' Moral Disengagement from Reciprocity Concerns in Participative Pricing," Journal of Business Ethics, Springer, vol. 178(2), pages 537-554, June.
    3. Dyussembayeva, Shynar & Viglia, Giampaolo & Nieto-Garcia, Marta & Mattila, Anna S., 2022. "Would you like to add a gratuity? When explicit requests hamper tipping," Journal of Business Research, Elsevier, vol. 139(C), pages 908-917.
    4. Mengmeng Xu & Hongyan Jiang & Huimin Tan, 2023. "Can power predict consumers’ preferences for aesthetic products? The moderating role of locus of control," Marketing Letters, Springer, vol. 34(4), pages 575-589, December.
    5. Chao, Yong & Fernandez, Jose & Nahata, Babu, 2019. "Pay-what-you-want pricing under competition: Breaking the Bertrand Trap," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 82(C).
    6. Mukherjee, Sudipta & Pandelaere, Mario, 2023. "The influence of self-decided prices on expected quality," Journal of Business Research, Elsevier, vol. 160(C).
    7. Dang, Ngoc Bich & Bertrandias, Laurent, 2023. "Social robots as healing aids: How and why powerlessness influences the intention to adopt social robots," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    8. 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.
    9. Damon Alexander & Christopher Boone & Michael Lynnb, 2021. "The Effects of Tip Recommendations on Customer Tipping, Satisfaction, Repatronage, and Spending," Management Science, INFORMS, vol. 67(1), pages 146-165, January.
    10. Veronica L. Thomas & Kendra Fowler & Christina Saenger, 2020. "Celebrity influence on word of mouth: the interplay of power states and power expectations," Marketing Letters, Springer, vol. 31(1), pages 105-120, March.
    11. Ina Garnefeld & Sabrina Helm & Ann-Kathrin Grötschel, 2020. "May we buy your love? psychological effects of incentives on writing likelihood and valence of online product reviews," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(4), pages 805-820, December.

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