Determinants of Consumers' Response to Pay-What-You-Want Pricing Strategy on the Internet

摘要

Pay-what-you-want pricing strategy is a new form of participative pricing, which offers consumers the greatest control over prices, as it allows them to set the price at any level, including zero, and the seller cannot reject it (Kim et al. 2009). Previous research has studied the effects of pay-what-you-want pricing on consumers' willingness to pay, suggesting that such approach could lead to an increase in overall revenues (Kim et al. 2009). Despite the potential financial benefits, the viability of pay-want-you-want practice for different industry sectors or selling channels remains under-investigated. Prior literature has mainly focused on the service sectors in brick-and-mortar stores. Given the distinct differences between the brick-and-mortar and Internet shopping environ-ments (e.g., lack of sensory attributes), little is known about whether this new pricing strategy can be successfully extended to an online platform, particularly, to tangible products. The objectives of this research are to investigate the feasibility of adopting the pay-what-you-want pricing mechanism on the Internet and to identify determinant factors that might influence consumers' willingness to pay.