Institute of Electronic Commerce and Digital Markets
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Pricing

The increasing digitization of business processes leads to a growing usage of dynamic / interactive price mechanisms on digital platforms and thereby to an increasing personalization of prices. For instance, customer-driven price mechanisms enable buyers to influence their purchase price. Two famous examples are Pay What You Want (PWYW) and Name Your Own Price (NYOP). Companies using PWYW let their customers decide how much they want to pay for a product or service - in extreme cases the customer even pays nothing. In the case of NYOP, customers state a price, which is only accepted by the seller if it is above his secret minimum price. As customers are involved in the pricing process of PWYW and NYOP and (partially) determine the final price of a transaction, these price formats are also called participatory price mechanisms.

The goal of our research is to better understand the motives for sellers to use such mechanisms and to better understand the behavior of consumers in the presence of such pricing mechanisms. This poses questions about the willingness to pay, search costs and the payment / bid behavior of consumers. In addition, the optimal design of those mechanisms is an important and practically relevant question. A deeper understanding of these mechanisms is important in order to derive implications for the optimal application of PWYW and NYOP and, moreover, thereby consumers can be supported at making better decisions in the presence of these price formats. Finally, regulating authorities can be informed about the efficiency and the competitive impact of these mechanisms.

In addition to customer-driven price mechanisms, we also apply behavioral / experimental approaches in order to measure willingness to pay and we also cover related sales and price strategies, such as dynamic pricing, pricing for new products and opaque Selling.

Keywords:

  • Name Your Own Price (NYOP)
  • Pay What You Want (PWYW)
  • Opaque Selling
  • Dynamic Pricing
  • Price elasticity at media products
  • Price strategies for new products

Members:

Partners:

  • Gesellschaft für Konsumforschung (GfK)
  • Germanwings
  • Thieme Publishers

Funding:

  • DFG
  • BMBF

Publications:

Publications in the research area of 'Pricing'