Pay what you want

from Wikipedia, the free encyclopedia

Pay what you want ( PWYW , Pay what you want ) is a pricing model in which the price alone by the buyer is fixed. The seller offers products without a price and the buyer is asked to pay a price that is reasonable for him. The buyer also has the option of not paying anything for the product, i. H. to set the price to zero. The transaction takes place at exactly this price, without the provider being able to withdraw from his product range.

concept

In addition to classic auctions and Name your own price (NYOP), PWYW is one of the participatory price mechanisms that are characterized by the fact that both buyers and sellers can influence the final price. Similar to classic auctions and NYOP, with PWYW the buyer determines the amount of the final price, whereby the seller can exert an influence on the final price through the design options of the mechanism that he has previously determined. It differs, however, that with PWYW there is no price threshold or no minimum price. At auctions and NYOP, on the other hand, there is the option of requesting a minimum price.

history

Pay what you want has always existed on the fringes of the economy, be it in tips and rewards for street performers or in donations to charity . However, in recent years this concept has also found increasing adaptation in traditional economic areas: theaters offer it for selected performances; More and more restaurants are also following this model, at least since 2003 when PWYW was introduced in Salt Lake City in the One World Everybody Eats restaurant. The restaurant is now run by a nonprofit organization, which is now demanding a minimum entry price of $ 4 from customers.

Another popular example of PWYW came from the British rock band Radiohead in October 2007 . For two months, she left her fans to determine the price for the then newly released album " In Rainbows " for download on her website. According to publications by the market research company comScore, 62% of those paying did not pay more than the mandatory credit card fees. The average price paid across all downloads was $ 2.26, while the paid downloads came to an average of $ 6. According to band member Thom Yorke , however, the band Radiohead was able to benefit from PWYW. Other names from the music industry such as Girl Talk, Trent Reznor and the comedian Steve Hofstetter then followed the example of Radiohead.

In the meantime, there are also music platforms on the Internet, such as Noisetrade or Aralie, on which customers can download songs and albums from different artists under PWYW conditions.

In the field of computer games, a well-known and successful adaptation of the concept is the “ Humble Bundle ” series launched in 2010 . With this form of digital distribution , several DRM- free and cross-platform games are offered in a bundle, and part of the proceeds go to non-profit organizations. As an incentive to pay a higher price, the buyer also receives additional games as a bonus if he pays more than the average.

Investigations

The results of a scientific study by the Johann Wolfgang Goethe University in Frankfurt am Main indicate that consumers do not take advantage of the price mechanism and do not behave opportunistically. On the basis of three field experiments (at a restaurant, a multiplex cinema and a delicatessen shop) it was shown that customers paid prices that deviated significantly from zero. For example, an analysis of the motives for why customers paid more than zero showed that loyalty to the restaurant had a positive effect on price. The income and frugality of the consumer also played a role. Wealthy guests paid more than average in the restaurant, and thrifty “bargain hunters” a little less. The most important influencing factor is the so-called reference price. When determining prices, consumers ask themselves how much they usually pay for a comparable or the same service. This is followed by a subjective assessment of whether the price is appropriate. In addition, PWYW led to an increase in sales (restaurant and deli) and an increase in new customers in two studies. In addition, PWYW works especially with personal contact between buyer and seller. Social control ensures that buyers do not behave opportunistically and that they pay a price that is reasonable for them for the product. In controlled laboratory experiments, Klaus M. Schmidt , Martin Spann and Robert Zeithammer show that social preferences with regard to a fair division of appreciation between buyer and seller and strategic motives to keep the seller in the market explain the amount of payments.

In the meantime, a study by the Ruhr University Bochum has examined the long-term effects of price decisions made by buyers in the case of repeated transactions. Using latent growth curve models, the authors can show that the average prices paid decrease with each transaction, but the price discount decreases. They also show that the buyers' preference for fairness and price awareness have an influence on the slope of the individual price curves. In the field of scientific journals, the results of an experiment by Thieme-Verlag turned out to be ambivalent: The PWYW principle is used in the publisher's Surgery Journal; for the open access publication of an article, an article fee is due, the amount of which is determined by the authors. Although the journal receives an above-average number of submissions, the average fees paid are well below the publisher's expectations.

Individual evidence

  1. ^ A b c J. Kim, M. Natter, M. Spann: Pay-What-You-Want - A New Participative Pricing Mechanism. In: Journal of Marketing. Vol. 73 (1), 2009, pp. 44-58.
  2. ^ Jagmohan Raju, Z. John Zhang: Smart Pricing. Chapter 1: Pay As You Wish. Pricing. Wharton School Publishing, 2010, ISBN 978-0-13-149418-3 .
  3. ^ Restaurant depends on the kindness of strangers. In: Associated Press at MSNBC . July 6, 2004, accessed March 27, 2007 .
  4. ↑ nytimes.com
  5. ↑ heise.de
  6. ↑ comscore.com ( Memento of the original from July 1, 2008 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.comscore.com
  7. ↑ wired.com
  8. ↑ noisetrade.com
  9. ↑ aralie.com
  10. ↑ Michael Thompson: Humble Bundle: greatest sale of indie games ever? In: Ars Technica . May 4, 2010, accessed December 5, 2011 .
  11. ^ Klaus M. Schmidt, Martin Spann, Robert Zeithammer: Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets. In: Management Science. 61, 2015, p. 1217, doi: 10.1287 / mnsc.2014.1946 .
  12. ↑ L. Schons, M. Rese, J. Wieseke, W. Rasmussen, D. Weber, W. Strotmann: There is nothing permanent except change — analyzing individual price dynamics in “pay-what-you-want” situations. In: Marketing Letters. Vol. 25 (1), 2014, pp. 25-36.
  13. ^ Ulrich Herb : Open Access - Pay what you want. In: telepolis. March 9, 2016, accessed March 10, 2017 .