Pay-What-You-Want
Pay-What-You-Want (PWYW) is a new alternative of a dynamic pricing model that delegates the whole price determination to the buyer. The use of PWYW is of great potential since PWYW allows for individually differentiated prices which accounts for heterogeneous valuations of consumers and, thus, increased efficiency. In addition, sellers can attract new customers as a result of the mechanism’s high level of innovativeness by permitting the consumers to participate in the price-setting process. Finally, sellers can also use individual prices for internal forecasting and for adapting cost structure to the actual price paid.
Contact: Dr. Ju-Young Kim
June 2010: [Marketing News Exclusives]
