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Investigating relative impact of reference prices on customers’ price evaluation in absence of posted prices: a case of Pay-What-You-Want (PWYW) pricing

Author

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  • Preeti Narwal

    (Indian Institute of Technology (IIT), Roorkee)

  • J. K. Nayak

    (Indian Institute of Technology (IIT), Roorkee)

Abstract

This study investigates customers’ evaluation of the offered price suggestion for a consumer durable sold under Pay-What-You-Want pricing. The relative use of internal reference price (IRP) and external reference price (ERP) is examined in customers’ price evaluation process. This study is a quantitative study employing a scenario-based approach to obtain responses from the participants. 208 students participated in between-subject factorial experiment design. ANCOVA and simple effects analysis were used to assess customers’ responses to measures like price assessment and perceived price fairness. Results show that respondents exhibit the relatively greater influence of ERP than IRP in the price evaluation process. This varying effect was attributed to two key factors, accessibility of the information and diagnostic perceptions.

Suggested Citation

  • 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.
    • Handle: RePEc:pal:jorapm:v:19:y:2020:i:4:d:10.1057_s41272-019-00198-2
    DOI: 10.1057/s41272-019-00198-2
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    3. Liu, Xiaotian & Popkowski Leszczyc, Peter T.L., 2023. "The reference price effect of historical price lists in online auctions," Journal of Retailing and Consumer Services, Elsevier, vol. 71(C).

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