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Is it worth the retailers to play with the “pay what you want” price? Shelle Santana explains how much, and why, customers will pay the interesting logic behind it. One finding: Sellers must dramatically change for what other customers are prepared to pay.<\/p>\r\n
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Santana found that by subtly influencing the atmosphere, sellers can drastically alter what certain customers are willing to pay, in a series of experiments \u2014 including a field experiment where she posed with students as snack bar employees.<\/p>\r\n
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Many businesses use the tactic as a campaign to attract new clients, often with a social tie-in as an additional incentive \u2014 for example , a restaurant runs a PWYW campaign and donates some of the proceeds to a charity to feed the hungry.<\/p>\r\n
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Nonetheless, all PWYW methods are produced equal. Santana analyzed data from a New York pet adoption service, discovering that patrons on average charged below the $150 adoption rate, some charging as much as $260. But the most common ticket price paid was a penny for a PWYW premiere of the documentary Freakonomics. “It got me wondering, why these cases are so different,” Santana says.<\/p>\r\n
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Borrowing from literature on social psychology, she conjectured it may have something to do with how the way consumers think about the transaction influences their actions.<\/p>\r\n
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Many people are “pro-social” when faced with a decision about how to distribute resources between themselves and others, meaning they are likely to seek an fair distribution of resources, while others are “pro-self,” meaning they are seeking to maximize value for themselves. She asked, will people with pro-social values pay more when presented with a PWYW situation?<\/p>\r\n
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Although previous research has shown that consumers are willing to pay more when a portion of the proceeds are donated to charity, research by Santana and Morwitz suggests that such a expensive tie-in may not be necessary.<\/p>\r\n
so, what’s your price?<\/p>\r\n
<\/p>\r\n
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