Exploring the Role of Social Visibility and Goal Framing in PWYW Pricing

Pay what you want (PWYW) is a participative pricing mechanisms
that allows consumers to exercise full control over pricing by
letting them pay any price (including zero) for a product or service
(Chandran and Morwitz, 2005; Kim, Natter and Span, 2009). Despite
growing interest in PWYW pricing, there are still many research
gaps. First, Kim et al. (2009) explore only the direct effects of altruism,
price consciousness and reference prices on consumers’ willingness
to pay (WTP) but ignore their interactions with each other.
Second, there is mixed findings about the impact of social motivations
on PWYW pricing decisions with Kim et al. (2009) showing
that consumers pay a price higher than zero in ‘face-to-face’ PWYW
interactions; Gneezy et al. (2012) show that ‘social visibility’ has a
negative effect on the prices paid by the consumers, whereas Machado
and Sinha (2012) did not find any significant effect of social
visibility. We address both these research gaps in this paper by showing
that altruism does not have a direct influence on PWYW prices
and its impact is moderated by price consciousness. We also show
that price consciousness moderates the effect of internal reference
price on WTP. Finally, we find that social visibility moderates the
influence of consumer motivation (i.e., intrinsic or extrinsic) on their
willingness to pay in the PWYW context.