EXPRESS: The Control–Effort Trade-Off in Participative Pricing: How Easing Pricing Decisions Maximizes Pricing Performance

Participative pricing strategies may influence consumer purchase decisions; this research proposes specifically that firms’ delegation of pricing decisions to consumers can create a control–effort trade-off. Consumers favor greater pricing control but are deterred by the effort involved in deciding what to pay. Strategies such as pay what you want (PWYW) in turn might reduce purchase intentions due to the effort involved. In contrast, strategies that increase feelings of control but not perceived effort, such as pick your price (PYP) options that let consumers choose from a limited set of prices, could enhance pricing outcomes. A field study and four laboratory experiments confirm these propositions. The findings demonstrate the mixed effects of participative pricing, identify mediating mechanisms that explain these effects, and specify common moderating conditions that shape the outcomes of participative pricing. These results have notable implications for pricing theory and practice.

The Gift and Pay-What-You-Want Pricing

This paper addresses the participative pricing mechanism of Pay-What-You-Want pricing as related to Marcel Mauss’s concept of the Gift. Reciprocity is a behavioural pattern imminent to the Gift as well as to Pay-What-You-Want pricing. The paper refers to results from behavioural economics in order to identify factors that positively influence reciprocity. It is argued that the aspects elaborated on in the Gift are also relevant to the PWYW pricing mechanism when it comes to implementations of the latter as one of the corporate pricing strategies.