Sampling, discounts or pay-what-you-want: Two field experiments

A review of the empirical literature on Pay-What-You-Want price setting

“…The PWYW group rated the sales promotion measure significantly better in terms of its entertainment value and innovativeness and significantly worse with regard to its saving potential and personal effort caused by the measure than the consumer group with the free of charge sample. A second field study, which was also conducted by Kim et al (2014b) and focused on a professionally produced portrait photo, reveals similar results: Fixed discounts or free sample price settings outperformed the PWYW approach in terms of the personal effort of participating in the promotion as perceived by customers.…”

“…The evaluation results of field studies, which contain behavioral data on PWYW prices paid voluntarily for real purchases and compare them with common fixed market prices, yield the following overall picture (Bourreau et al, 2015;Drevs, 2013;Gautier and Van der Klaauw, 2012;Gneezy et al, 2010Gneezy et al, , 2012Kim et al, 2009Kim et al, , 2010aKim et al, , 2010bKim et al, , 2014aKim et al, , 2014bLeón et al, 2012;Machado and Sinha, 2012 (study 3); Regner, 2015;Riener and Traxler, 2012): Brought to you by | MIT Libraries Authenticated Download Date | 5/9/18 8:48 PM -Only a very small portion of buyers pays nothing or more than the standard fixed price for the good, respectively. -The majority of buyers pays less than the standard fixed price so that the average payment per unit/customer in a PWYW setting is lower than the regular fixed market price for the good.…”

“…The most prominent "indirect" financial outcomes of PWYW pricing are additional revenues that a supplier generates through stimulating demand for other and potentially more expensive products or services which typically complement the goods sold at PWYW (e.g., drinks served with a meal in a restaurant). The empirical literature occasionally mentions such cross-and upselling effects of the PWYW method (Gneezy et al, 2010;Kim et al, 2009Kim et al, , 2010bKim et al, , 2014aKim et al, , 2014bSchmidt et al, 2015;Steiner, 1997). However, these effects have not yet been the focus of systematic empirical investigation.…”

“…For instance, it is plausible that deliberate or incidental customer encounters with PWYW may influence buyer satisfaction with a good after its purchase, seller image in the eyes of the buyers, follow-up purchases and seller recommendations communicated by buyers to other consumers (Kim et al, 2009(Kim et al, , 2014a(Kim et al, , 2014bNatter and Kaufmann, 2015; see also Figure 2). This class of criteria has also been almost never taken into account in earlier empirical PWYW research.…”

The Pay-What-You-Want game: What can be learned from the experimental evidence on Dictator and Trust Games?

“…From a seller's perspective, PWYW pricing can be used as a short-term marketing strategy, drawing attention to a new product (e.g., Kim, Natter and Spann, 2014), or as a long-term pricing strategy (e.g., Riener and Traxler, 2012). The literature on PWYW pricing has not fully addressed the topic of PWYW pricing as a long-term pricing strategy yet.…”