OnDemand WTP Pricing Research

When Does Pay What You Want Pricing Work? | Psychology Today

I am sure that at one time or another, many marketers have considered using a Pay What You Want (PWYW) pricing scheme to sell their products. On the face of it, it seems such an alluring idea, predicated on human decency and reciprocity. PWYW pricing is simple. Provide a good-quality product to customers, let them enjoy it, and then give them complete discretion to pay whatever they want for the product. No bills, no claims (although sometimes there may be a posted suggested price), pay if you want to (and as much as you want), don’t if you don’t.

The business logic behind PWYW pricing is two-fold. First, the company conveys confidence, essentially telling the customer “we are so sure you will like our product that you will pay for it.” The second reason behind PWYW pricing is to empower customers. The company gives total control to the customer to weigh the value they have gotten from the product, and pay an appropriate price (weigh then pay).

But this transfer of power is a double-edged sword. With PWYW pricing, many dishonest customers could walk away without paying anything, or underpay significantly, leaving the business in dire financial straits. Still other customers may be honest, but could feel confused and conflicted about what the appropriate price is, and stay away altogether.

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When Does Pay What You Want Pricing Work? | Psychology Today.

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