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

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Abstract

In a Pay What You Want (PWYW) setting companies empower their customers to fix the prices buyers voluntarily pay for a delivered product or service. The seller agrees to any price (including zero) customers are paying. For about ten years researchers empirically investigate customer reactions to and economic outcomes of this pricing method. The present paper distinguishes PWYW from other voluntary payment mechanisms and reviews 72 English- or German-speaking PWYW publications, which appeared between January 2006 and September 2016 and contain 97 independent empirical data sets. Prior PWYW research is structured with the help of a conceptual framework which incorporates payment procedure design, buyer, seller, focal sales object and market context characteristics as factors potentially influencing customer perceptions of the PWYW scheme and their behavioral reactions to PWYW offers. The review discusses both consistent key findings as well as contradictory results and derives recommendations for future empirical PWYW research efforts.

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