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Aligning economic and social value creation through pay-what-you-want pricing

Author

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  • Karla I. Mendoza-Abarca
  • Hillary N. Mellema

Abstract

The main objective of social ventures is the creation of social value. However, these organizations must also generate and appropriate economic value to fund their social value-creating activities. Mechanisms that enable the alignment of these seemingly contradicting goals are necessary. The authors propose that a participative pricing mechanism known as pay-what-you-want (PWYW) is capable of aligning a venture's economic and social value creation goals. This mechanism allows customers to determine the price they are willing and able to pay. The authors explain that this mechanism enables social ventures to generate social value through their commercial activities by serving more beneficiaries in need, reducing the stigma of receiving help, allowing non-disadvantaged customers to show support for the social venture, and aligning commercial activities with the social mission, all while ensuring that sufficient economic value is captured to sustain operations.

Suggested Citation

  • Karla I. Mendoza-Abarca & Hillary N. Mellema, 2016. "Aligning economic and social value creation through pay-what-you-want pricing," Journal of Social Entrepreneurship, Taylor & Francis Journals, vol. 7(1), pages 101-125, March.
    • Handle: RePEc:taf:jsocen:v:7:y:2016:i:1:p:101-125
    DOI: 10.1080/19420676.2015.1015437
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. Emili Vizuete-Luciano & Oktay Güzel & José M. Merigó, 2023. "Bibliometric research of the Pay-What-You-Want Topic," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(5), pages 413-426, October.
    6. Roy, Rajat & Das, Gopal, 2022. "The role of contextual factors in increasing Pay-What-You-Want payments: Evidence from field experiments," Journal of Business Research, Elsevier, vol. 139(C), pages 1540-1552.
    7. 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.

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