Towards a new price discrimination strategy

Purpose: The purpose of this paper is to explore the applicability of Pay-What-You-Want (PWYW) pricing multi-channel retailing. Specifically, the impact of PWYW endogenous price discrimination on consumers’ price fairness perception of and reactions to PWYW is investigated. Design/methodology/approach: Three empirical studies with different product categories were conducted through lab experiments with student sample using scenario-based experimental approach. Findings: Results indicate the viability of PWYW with lower suggested external reference price. The impact of PWYW endogenous price discrimination is dependent upon the magnitude of price deviation from regular market price and product category. Consumers’ negative perceptions of price differentiation interacted with their underlying beliefs about the retailer’s cost of products across different channels. PWYW acceptance can be fostered in multi-channel by communication of additional-value generated in offline selling. Originality/value: The current research is possibly the first to explore PWYW viability in the multi-channel context by exploring the consumer’s price perception process and critical consumer reactions through a well-structured research framework.