Pay-What-You-Want

Pay- What-You- Want ( PWYW, Pay -what- you - want) is a pricing model where the price is determined solely by the purchaser. The seller offers products without price and the buyer is asked to pay a reasonable price for it. The Buyer shall also have the option not to pay for the product, ie the price to zero. The transaction is precisely at this price, without the provider may withdraw from its product range.

Concept

PWYW belongs - in addition to traditional auctions and Name - Your-Own Price ( NYOP ) - to the participative pricing mechanisms, which are characterized in that both the buyer and seller have influence on the final price. Similar to classic auctions and NYOP determined at PWYW the buyer the amount of the final price, which the seller can exercise by the persons previously established design possibilities of the mechanism influence on the final price. Different, however, is that at PWYW no price threshold or no reserve exists. For auctions and NYOP other hand there is the possibility to charge a minimum price.

History

Pay- What-You- Want has always existed on the fringes of the economy, be it at the tips, and that the remuneration of street artists or whether in donations for Wohlfahrt'wohltätige purposes. However, this approach has had in recent years, growing adaptation in classical economic areas: theater offer it for selected performances; as more and more restaurants follow this model, at least since 2003, when PWYW was introduced in Salt Lake City at One World Everybody Eats restaurant. The restaurant is now run by a nonprofit organization, which now requires a minimum entrance fee of $ 4 from customers.

Another has become known example of PWYW were delivered in October 2007, the British rock band Radiohead. She left her fans for two months, the price determination for the then newly released album " In Rainbows " for download on its website. According to the publications of the market research firm comScore, 62% of payor's have no more than the mandatory credit card fees paid. The average price paid for all downloads here was at $ 2.26, while the paid downloads came to a Durchschnittsspreis from $ 6. According to band member Thom Yorke, however, the band Radiohead could benefit from PWYW. Other names from the music industry such as Girl Talk, Trent Reznor and comedian Steve Hofstetter then followed the example of Radiohead.

Meanwhile, there are also online music platforms such as Noise Trade or Aralia, on which customers can download PWYW conditions songs and albums by various artists.

In the computer game field is launched in 2010, the Humble Indie Bundle series a well known and successful adaptation of the concept. In this form of digital distribution more games are DRM-free and cross-platform offered in a bundle, also goes a portion of the proceeds to charitable organizations. Incentive to pay as a higher price, the buyer gets also more games as a bonus to when he paid more than the average.

Investigations

The results of a scientific study by the University of Frankfurt suggest that consumers do not take advantage of the price mechanism and not behave opportunistically. Based on three field experiments (at a restaurant, a multiplex cinema and a delicatessen ) showed that customers paid prices that significantly differed from zero. An analysis of the motives for why the customer has paid more than zero, for example, showed that loyalty had a positive effect to the restaurant on the price. Similarly, the income and the economy of the consumer played a role. Wealthier they paid in the restaurant more than the average, economical " bargain hunters " a little less. The most important factor is the so-called reference price. In pricing, consumers ask the question, how much they usually pay for a similar or the same service. Then there will be a subjective assessment of whether the price is reasonable. In addition, led PWYW in two studies on sales growth (restaurant and deli ) and an increase in new customers. In addition PWYW works especially in a personal contact between buyer and seller. The social control ensures here that the buyers do not behave opportunistically and pay them a fair price for the product.