Year: 2016
Author: Trabold, Harald, Weaver, David W.
Vierteljahrshefte zur Wirtschaftsforschung, Vol. 85 (2016), Iss. 2 : pp. 81–97
Abstract
Ten years ago, the first companies began allowing their customers to make purchasing decisions based on the Pay What You Want principle, giving them the power to determine their own price for a good or service. Parallel to the emergence of this new pricing strategy, laboratory and field experiments conducted by behavioral economists confirmed that people are prepared to pay a price higher than zero, and even pay prices that cover the firm"s costs, despite being given the opportunity to pay nothing at all. Companies, especially those with expensive products, expose themselves to tremendous risk when implementing the Pay What You Want pricing strategy since a portion of consumers will act in an opportunistic manner, as the Homo Economicus model suggests. We show that in reality, establishing a full, long-term business model based on Pay What You Want principles only works in exceptional cases. The Pay What You Want pricing strategy is better suited as a component of a business model or as a marketing instrument.
Journal Article Details
Publisher Name: Global Science Press
Language: German
DOI: https://doi.org/10.3790/vjh.85.2.81
Vierteljahrshefte zur Wirtschaftsforschung, Vol. 85 (2016), Iss. 2 : pp. 81–97
Published online: 2016-06
AMS Subject Headings: Duncker & Humblot, Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 17
Keywords: Pay what you want behavioral economics consumer behaviour altruism D01 D12 M31