Power and the appeal of the deal: how consumers value the control provided by Pay What You Want (PWYW) pricing

Abstract

The current research offers a number of novel findings regarding how individuals respond to Pay What You Want (PWYW) pricing, a strategy that affords consumers complete control over prices. Two experiments integrate research on consumer power into the PWYW literature to show that PWYW's influence arises primarily with respect to low-power consumers who use PWYW's pricing control to regulate their power states. Specifically, PWYW is shown to promote stronger intentions to purchase and to recommend a product than fixed pricing, particularly for low- versus high-power consumers. Supporting the notion that PWYW offers the powerless a platform for power elevation, experiment 2 reveals that the more favorable responses of low-power consumers to PWYW are accompanied by increased feelings of self-reliance. Further suggesting that low-power consumers value the pricing control afforded by PWYW for power regulation, the effects are not attributed to differences in the amounts that low- and high-power consumers are willing to pay under PWYW. In addition to providing a deeper understanding of PWYW pricing, the present work extends the power literature by demonstrating that power restoration can transpire not only from the possession of certain products but also through the pricing mechanism by which such products are obtained.