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There is nothing permanent except change—analyzing individual price dynamics in “pay-what-you-want” situations

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  • Laura Schons
  • Mario Rese
  • Jan Wieseke
  • Wiebke Rasmussen
  • Daniel Weber
  • Wolf-Christian Strotmann

Abstract

This study is examines the dynamics in prices paid in “pay-what-you-want” situations over multiple customer–seller transactions on an individual customer level. The analysis of potential dynamism in prices paid allows for an assessment of the profitability of pay-what-you-want pricing for sellers of frequently bought products and services. To empirically validate the framework, the authors conduct a field study that focuses on the aggregate and individual dynamics in prices paid over customers’ multiple purchases. Using latent growth modeling, the authors find significant but declining decreases in prices paid. Further, they identify stable individual and relational difference factors which predict steeper or more gradual declines in prices paid. Customers’ individual preferences for fairness and price consciousness as well as their overall satisfaction with the seller alleviate price declines. The authors discuss the practical and theoretical implications of these findings. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Laura Schons & Mario Rese & Jan Wieseke & Wiebke Rasmussen & Daniel Weber & Wolf-Christian Strotmann, 2014. "There is nothing permanent except change—analyzing individual price dynamics in “pay-what-you-want” situations," Marketing Letters, Springer, vol. 25(1), pages 25-36, March.
    • Handle: RePEc:kap:mktlet:v:25:y:2014:i:1:p:25-36
    DOI: 10.1007/s11002-013-9237-2
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    Cited by:

    1. Batt, Verena & Holzer, Matthias & Farouq, Jasmin & Bruhn, Manfred, 2018. "Pay What You Want: Eine empirische Untersuchung zur Wirkung des Pricing-Instruments auf Nachfrager," Marketing Review St.Gallen, Universität St.Gallen, Institut für Marketing und Customer Insight, vol. 35(2), pages 96-101.
    2. 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.
    3. Michal Krawczyk & Anna Kukla-Gryz & Joanna Tyrowicz, 2015. "Pushed by the crowd or pulled by the leaders? Peer effects in Pay-What-You-Want," Working Papers 2015-25, Faculty of Economic Sciences, University of Warsaw.
    4. Roggentin, Agnes Sophie, 2019. "Applicability of Pay-What-You-Want to High-Value Goods – A Case Study," Marketing Review St.Gallen, Universität St.Gallen, Institut für Marketing und Customer Insight, vol. 36(5), pages 56-63.
    5. 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.
    6. Gerpott, Torsten J. & Schneider, Christina, 2016. "Buying behaviors when similar products are available under pay-what-you-want and posted price conditions: Field-experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 135-145.
    7. 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.
    8. Narwal, Preeti & Rai, Shivam, 2022. "Individual differences and moral disengagement in Pay-What-You-Want pricing," Journal of Business Research, Elsevier, vol. 149(C), pages 528-547.
    9. 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.
    10. Weerawardena, Jay & Salunke, Sandeep & Haigh, Nardia & Sullivan Mort, Gillian, 2021. "Business model innovation in social purpose organizations: Conceptualizing dual social-economic value creation," Journal of Business Research, Elsevier, vol. 125(C), pages 762-771.
    11. Samahita Margaret, 2020. "Pay-What-You-Want in Competition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(1), pages 1-16, January.
    12. Nicole Koschate-Fischer & Katharina Wüllner, 2017. "New developments in behavioral pricing research," Journal of Business Economics, Springer, vol. 87(6), pages 809-875, August.
    13. 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.
    14. Jordi Tena‐Sánchez & Francisco J. León‐Medina & José A. Noguera, 2020. "Empathic cultural consumers: Pay what you want in the theater," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(4), pages 1213-1245, December.
    15. Natter, Martin & Kaufmann, Katharina, 2015. "Voluntary market payments: Underlying motives, success drivers and success potentials," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 57(C), pages 149-157.
    16. Stangl, Brigitte & Kastner, Margit & Prayag, Girish, 2017. "Pay-what-you-want for high-value priced services: Differences between potential, new, and repeat customers," Journal of Business Research, Elsevier, vol. 74(C), pages 168-174.
    17. Ma, Xuejing & Wang, Zetao & Liu, Hongju, 2022. "Do long-life customers pay more in pay-what-you-want pricing? Evidence from live streaming," Journal of Business Research, Elsevier, vol. 142(C), pages 998-1009.
    18. 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.
    19. Gravert, Christina, 2017. "Pride and patronage - pay-what-you-want pricing at a charitable bookstore," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 67(C), pages 1-7.
    20. 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.
    21. Fraiman, Daniel, 2022. "A self-organized criticality participative pricing mechanism for selling zero-marginal cost products," Chaos, Solitons & Fractals, Elsevier, vol. 158(C).
    22. 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).
    23. Kunter, Marcus, 2015. "Exploring the Pay-What-You-Want payment motivation," Journal of Business Research, Elsevier, vol. 68(11), pages 2347-2357.

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