An insight into pay-what-you-want pricing

Research output: Contribution to journalArticleResearchpeer-review

7 Citations (Scopus)

Abstract

Purpose – Extant literature on pricing posits that consumers’ internal reference price (IRP) drives willingness to pay (WTP), when external pricing cues are available. This positive IRP-WTP relationship is further moderated by involvement and price consciousness. The purpose of this paper is to test how the IRP-WTP relationship will be moderated by involvement and price consciousness, albeit in the pay-what-you-want (PWYW) context. In the PWYW setting consumers can pay any amount of money (including nothing) and no external pricing cues are provided. Design/methodology/approach – A survey was engaged to measure the key variables, and the data was analyzed using hierarchical multiple regression with spotlight analyses. Findings – In the normal everyday pricing context, involvement strengthens the IRP-WTP relationship, while price consciousness weakens it. Contrary to this normal pricing wisdom, in the PWYW context, it was found that both involvement and price consciousness weaken the IRP-WTP relationship, thereby driving down consumers’ WTP. Research limitations/implications – Future studies should use experimental design to manipulate some of the independent variables used in the study, focus on the mediating processes that underlie PWYW decision-making and extend the findings in the context of wider demographics. Practical implications – Managers should focus on segmentation, branding and product experiences to ensure higher returns of PWYW businesses. Originality/value – This paper addresses lack of overall research in the PWYW area, and also addresses some key gaps left by extant research of Kim et al. (2009) that was published in the Journal of Marketing.

Original languageEnglish
Pages (from-to)733-748
Number of pages16
JournalMarketing Intelligence and Planning
Volume33
Issue number5
DOIs
Publication statusPublished - 3 Aug 2015
Externally publishedYes

Fingerprint

Pricing
Willingness-to-pay
Reference price
Price consciousness
Decision making
Demographics
Managers
Segmentation
Marketing
Experimental design
Wisdom
Branding
Multiple regression
Design methodology

Cite this

@article{3cd7d82eefcc4afa965c485f5dd4aba7,
title = "An insight into pay-what-you-want pricing",
abstract = "Purpose – Extant literature on pricing posits that consumers’ internal reference price (IRP) drives willingness to pay (WTP), when external pricing cues are available. This positive IRP-WTP relationship is further moderated by involvement and price consciousness. The purpose of this paper is to test how the IRP-WTP relationship will be moderated by involvement and price consciousness, albeit in the pay-what-you-want (PWYW) context. In the PWYW setting consumers can pay any amount of money (including nothing) and no external pricing cues are provided. Design/methodology/approach – A survey was engaged to measure the key variables, and the data was analyzed using hierarchical multiple regression with spotlight analyses. Findings – In the normal everyday pricing context, involvement strengthens the IRP-WTP relationship, while price consciousness weakens it. Contrary to this normal pricing wisdom, in the PWYW context, it was found that both involvement and price consciousness weaken the IRP-WTP relationship, thereby driving down consumers’ WTP. Research limitations/implications – Future studies should use experimental design to manipulate some of the independent variables used in the study, focus on the mediating processes that underlie PWYW decision-making and extend the findings in the context of wider demographics. Practical implications – Managers should focus on segmentation, branding and product experiences to ensure higher returns of PWYW businesses. Originality/value – This paper addresses lack of overall research in the PWYW area, and also addresses some key gaps left by extant research of Kim et al. (2009) that was published in the Journal of Marketing.",
author = "Rajat Roy",
year = "2015",
month = "8",
day = "3",
doi = "10.1108/MIP-06-2014-0118",
language = "English",
volume = "33",
pages = "733--748",
journal = "Marketing Intelligence and Planning",
issn = "0263-4503",
publisher = "Emerald Group Publishing Ltd.",
number = "5",

}

An insight into pay-what-you-want pricing. / Roy, Rajat.

In: Marketing Intelligence and Planning, Vol. 33, No. 5, 03.08.2015, p. 733-748.

Research output: Contribution to journalArticleResearchpeer-review

TY - JOUR

T1 - An insight into pay-what-you-want pricing

AU - Roy, Rajat

PY - 2015/8/3

Y1 - 2015/8/3

N2 - Purpose – Extant literature on pricing posits that consumers’ internal reference price (IRP) drives willingness to pay (WTP), when external pricing cues are available. This positive IRP-WTP relationship is further moderated by involvement and price consciousness. The purpose of this paper is to test how the IRP-WTP relationship will be moderated by involvement and price consciousness, albeit in the pay-what-you-want (PWYW) context. In the PWYW setting consumers can pay any amount of money (including nothing) and no external pricing cues are provided. Design/methodology/approach – A survey was engaged to measure the key variables, and the data was analyzed using hierarchical multiple regression with spotlight analyses. Findings – In the normal everyday pricing context, involvement strengthens the IRP-WTP relationship, while price consciousness weakens it. Contrary to this normal pricing wisdom, in the PWYW context, it was found that both involvement and price consciousness weaken the IRP-WTP relationship, thereby driving down consumers’ WTP. Research limitations/implications – Future studies should use experimental design to manipulate some of the independent variables used in the study, focus on the mediating processes that underlie PWYW decision-making and extend the findings in the context of wider demographics. Practical implications – Managers should focus on segmentation, branding and product experiences to ensure higher returns of PWYW businesses. Originality/value – This paper addresses lack of overall research in the PWYW area, and also addresses some key gaps left by extant research of Kim et al. (2009) that was published in the Journal of Marketing.

AB - Purpose – Extant literature on pricing posits that consumers’ internal reference price (IRP) drives willingness to pay (WTP), when external pricing cues are available. This positive IRP-WTP relationship is further moderated by involvement and price consciousness. The purpose of this paper is to test how the IRP-WTP relationship will be moderated by involvement and price consciousness, albeit in the pay-what-you-want (PWYW) context. In the PWYW setting consumers can pay any amount of money (including nothing) and no external pricing cues are provided. Design/methodology/approach – A survey was engaged to measure the key variables, and the data was analyzed using hierarchical multiple regression with spotlight analyses. Findings – In the normal everyday pricing context, involvement strengthens the IRP-WTP relationship, while price consciousness weakens it. Contrary to this normal pricing wisdom, in the PWYW context, it was found that both involvement and price consciousness weaken the IRP-WTP relationship, thereby driving down consumers’ WTP. Research limitations/implications – Future studies should use experimental design to manipulate some of the independent variables used in the study, focus on the mediating processes that underlie PWYW decision-making and extend the findings in the context of wider demographics. Practical implications – Managers should focus on segmentation, branding and product experiences to ensure higher returns of PWYW businesses. Originality/value – This paper addresses lack of overall research in the PWYW area, and also addresses some key gaps left by extant research of Kim et al. (2009) that was published in the Journal of Marketing.

UR - http://www.scopus.com/inward/record.url?scp=84937853517&partnerID=8YFLogxK

U2 - 10.1108/MIP-06-2014-0118

DO - 10.1108/MIP-06-2014-0118

M3 - Article

VL - 33

SP - 733

EP - 748

JO - Marketing Intelligence and Planning

JF - Marketing Intelligence and Planning

SN - 0263-4503

IS - 5

ER -