The "Pay What You Want" Pricing Policy: Power Sharing or Communication Action?

Abstract

The academic literature focusing on consumer empowerment has studied the issue of the product (co-creation, co-innovation), the brand (brand community, consumer's tributes), the communication (lead users) and the consumer work. However, it is surprising to note that little attention has been given to the consumer participation to price setting, and particularly to the 'Pay What You Want (PWYW)' pricing mechanism. Although researchers do not examine this issue, a number of enterprises have adopted this new pricing policy. Recently, several reports and newspaper articles have largely evoked this subject by describing it as innovative and as a marketing tool (remedy to the purchasing power crisis, setting a fair price, regaining customers ...). The aim of this study is to explore the PWYW mechanism: Is it a communication tool as mentioned by the media or a new participative mechanism which enables power sharing between the enterprise and its customers? We are interested in the enterprises' point of view and we hope to identify the reasons which can explain why managers take the risk to decrease their profits. The intention of the enterprise is it really to more involve customers in the decision making?