Collaborative destination marketing and PWYW

Abstract

Innovative pricing methods such as auctions, Name-Your-Own-Price and Pay-What-You-Want (PWYW) are fairly recent. These pricing approaches allow sellers and customers to collaborate in the price setting process (Amor, 2000; Shapiro & Zillante, 2009). PWYW, in particular, goes a step further by allowing customers to decide which price they want to pay after consumption. As such, this approach takes away the power of price setting from the seller. The customer is free to set any price (even zero) and the seller has to accept it (Kim, Natter, & Spann, 2009). Studies on PWYW provide insights into why the approach works in certain societies (Bolton, 1991; Elster, 1989; Gneezy, Gneezy, Riener, & Nelson, 2012), which factors (e.g. satisfaction, income and price consciousness) impact on the PWYW price people pay, and its profitability for various services (Chao, Fernandez, & Nahata, 2015; Kim et al., 2009; Schons et al., 2014). There is currently no study in the tourism field that either applies PWYW at the destination level to evaluate profitability or the impact of PWYW on subsequent tourist satisfaction. The study contributes to the dearth of literature on collaborative pricing in the tourism field.