Pay What You Want Pricing Strategy in the Modern Customer Driven Era and How to Make this a Unique and Efficient Marketing Strategy for Future Businesses

Abstract

Pay what you want (PWYW) can be an attractive marketing Pricing strategy to fully penetrate a market without giving away the product for free, and to undercut competitors that use posted prices. I questioned the ideal customers to identify causal factors determining the willingness of buyers to pay voluntarily under PWYW. In this paper I let the sellers choose their pricing strategy. The experimental results show that outcome-based social preferences and strategic considerations to keep the seller in the market can explain why and how much buyers pay voluntarily to a PWYW seller. We find that PWYW can be viable on a short-term target-based experimentation for promotion purpose, or long-term strategy with some regulations applied in it. It is less successful as a competitive strategy because it results in loss making in long term business opportunity and not only it affects the profitability it might hamper the customer response in terms of services deterioration and the negative impact it could project on the employees who would have to do  more than they were expected to in the current role. The research will show how those shortcomings can be overcome by taking care of the negative outcomes and developed as a future pricing strategy in marketing mix