Pay-as-You-Wish Pricing
| Autor: | Z. John Zhang, Yuxin Chen, Oded Koenigsberg |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2017 |
| Předmět: |
Marketing
Psychological pricing 05 social sciences Product (business) Microeconomics Competition (economics) BM Pricing schedule Variable pricing 0502 economics and business Economics 050211 marketing Profitability index 050207 economics Business and International Management Rational pricing Pricing Limit price |
| ISSN: | 0732-2399 |
| Popis: | Some firms use a curious pricing mechanism called “pay as you wish” pricing (PAYW). When PAYW is used, a firm lets consumers decide what a product is worth to them and how much they want to pay to get the product. This practice has been observed in a number of industries. In this paper, we theoretically investigate why and where PAYW can be a profitable pricing strategy relative to the conventional “pay as asked” pricing (PAAP) strategy. We show that PAYW has a number of advantages over PAAP such that it is well suited for some industries but not for others. These advantages are as follows: (1) PAYW helps a firm to maximally penetrate a market; (2) it allows a firm to price discriminate among heterogenous consumers; (3) it helps to moderate price competition. We derive conditions under which PAYW dominates PAAP and discuss ways to improve the profitability of PAYW. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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