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Marketing Letters

, Volume 25, Issue 1, pp 25–36 | Cite as

There is nothing permanent except change—analyzing individual price dynamics in “pay-what-you-want” situations

  • Laura Marie SchonsEmail author
  • Mario Rese
  • Jan Wieseke
  • Wiebke Rasmussen
  • Daniel Weber
  • Wolf-Christian Strotmann
Article

Abstract

This study is examines the dynamics in prices paid in “pay-what-you-want” situations over multiple customer–seller transactions on an individual customer level. The analysis of potential dynamism in prices paid allows for an assessment of the profitability of pay-what-you-want pricing for sellers of frequently bought products and services. To empirically validate the framework, the authors conduct a field study that focuses on the aggregate and individual dynamics in prices paid over customers’ multiple purchases. Using latent growth modeling, the authors find significant but declining decreases in prices paid. Further, they identify stable individual and relational difference factors which predict steeper or more gradual declines in prices paid. Customers’ individual preferences for fairness and price consciousness as well as their overall satisfaction with the seller alleviate price declines. The authors discuss the practical and theoretical implications of these findings.

Keywords

Participative pricing Pay what you want Long-term price dynamics Reference prices Latent growth modeling 

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Laura Marie Schons
    • 1
    Email author
  • Mario Rese
    • 1
  • Jan Wieseke
    • 1
  • Wiebke Rasmussen
    • 1
  • Daniel Weber
    • 1
  • Wolf-Christian Strotmann
    • 1
  1. 1.Ruhr-University of BochumBochumGermany

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