169      ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No.  2  |  2018  |  169-193
A REVIEW OF THE EMPIRICAL EVIDENCE 
ON PWYW PRICING
MATTHIAS GREIFF
1
 Received: March 15, 2017
HENRIK EGBERT
2
 Accepted: January 8, 2018
ABSTRACT: The purpose of the paper is to review recent studies on Pay-What-You-Want 
(PWYW) pricing and to identify research gaps in the recently mushrooming literature on 
the topic. We examine a total of 53 empirical studies published between 2009 and 2016. In 
contrast to previous reviews we classify the research according to the type of study, i.e., the 
applied research methodology. That is why we discuss separately laboratory experiments, 
field experiments, survey experiments and case studies. Based on this descriptive review we 
identify the following two gaps in the study on PWYW pricing: (1) studies on PWYW pricing 
for high cost goods, and (2) studies on the long-term effects of PWYW pricing.
Keywords: Pay-What-You-Want, PWYW , pricing mechanism, review, empirical studies
JEL: C90, D12, D49, M21, M30
DOI: 10.15458/85451.64
1. INTRODUCTION
Pay-What-You-Want (PWYW) is a participative pricing mechanism (Chandran and 
Morwitz 2005, Natter and Kaufmann 2015), which leaves the pricing decision with the 
buyer. In contrast to other participative pricing mechanisms, like name-your-own-price 
(NYOP , see Spann, Skiera and Schäfers 2004, Spann and Tellis 2006), a buyer can choose 
any price (including zero) and the seller has to accept this price.
PWYW can be considered as a special form of voluntary market payments, which have 
been discussed before (e.g., the literature on tipping, Azar 2004, 2007). What distinguishes 
PWYW from other forms of voluntary market payments is that PWYW is used for 
goods and services, which are usually sold employing fixed or posted prices (e.g., music, 
restaurant meals, drinks, entertainment activities), and that the sellers who use PWYW 
compete with sellers who use fixed pricing (Chao, Fernandez and Nahata 2015; Gerpott 
and Schneider 2016).
PWYW pricing has recently received considerable attention in the management, business, 
and economics literature. There have been a sizeable number of empirical studies on 
1 Clausthal University of Technology, Institute of Management and Economics, Clausthal-Zellerfeld, 
Germany, e-mail: matthias.greiff@tu-clausthal.de
2 Corresponding Author, Anhalt University of Applied Sciences, Department of Economics, Germany, 
e-mail: henrik.egbert@hs-anhalt.de

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 170
PWYW pricing, and in this paper, we present a review of empirical studies on PWYW 
pricing published between 2009 and October 2016. In particular, we review empirical 
studies on PWYW pricing which report data generated in laboratory experiments, field 
experiments, survey experiments and case studies (see additionally Krzyżanowska and 
Tkaczyk 2016). In contrast to other recent reviews (Gerpott 2017), we include also studies 
that report findings from experimental settings.
The primary purpose of the paper is to structure recent research with respect to the 
different types of studies conducted. We thus distinguish between four methodological 
approaches: laboratory experiments, field experiments, survey experiments, and case 
studies. We differentiate between these four types of studies because results of PWYW 
mechanisms depend on the applied methodology, hence also the subjects on which data 
has been gathered. The result from our systematic comparison of 53 studies allows us to 
learn which effects are robust. Furthermore, certain authors report on different types of 
studies and apply different methodologies in one paper. So the descriptive review helps to 
disentangle these peculiarities. The second aim of the paper is to identify gaps in recent 
studies on PWYW pricing that are independent from the type of methodology, i.e. to 
identify topics that require additional research in order to obtain a more comprehensive 
answer to the question when PWYW is a suitable pricing mechanism and when it is not.
We find that (1) PWYW is used almost exclusively for low-cost goods, experience goods, 
and for bundles of goods and services, and that (2) almost all empirical studies focus on 
relatively short time periods. Based on our review, we identify some unanswered questions 
and suggest directions for further research.
This paper is structured as follows. In section 2, we review the empirical literature on 
PWYW pricing and summarize our findings in four tables. In section 3 we address topics 
which have not been dealt with in detail but which are relevant for sellers if PWYW is put 
into practice. In section 4, we conclude.
2. THE EMPIRICAL LITERATURE ON PWYW PRICING
2.1 Categorization of Empirical Studies
The first paper that explicitly addresses PWYW pricing, to our knowledge, is Kim, 
Natter and Spann (2009). Since this publication, the literature on PWYW has received 
considerable attention. In T ables 1 to 4 we summarize the results of the empirical studies on 
PWYW pricing published in the English language in journals in Economics and Business 
Administration between 2009 and October 2016. These studies have been collected from 
various scientific databases, such as JSTOR, EconLit, EBSCO, Scopus, Science Direct, 
ResearchGate and Google Scholar. We selected papers that included the keywords or 
acronyms such as Pay-What-You-Want, PWYW , Pay Your Own Price, voluntary pricing 
and that were empirical in nature. We excluded the related but distinguished topic of 
voluntary contributions to public good provisions because our focus is on private not on 

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 171
public goods. An initial search was conducted in 2014, followed by repeated sampling in 
2015 and finally in October 2016. The advantage of this repeated sampling was that papers 
which were initially identified as working papers could be included in this review in their 
form as published journal articles. To avoid publication bias, we also include relevant 
working papers that have not been published as journal articles yet.
In contrast to another recent review (Gerpott 2017), we decided to look at individual 
studies (case studies, experiments, etc.) instead of papers. This is because several papers 
report results from more than one study. We classify the empirical studies into four 
categories: laboratory experiments, field experiments, survey experiments, and case 
studies. We include in the review 5 laboratory experiments, 16 field experiments, 26 
survey experiments and 6 case studies. We exclude in this review recent experiments 
in neuroscience that record functional magnetic resonance imaging data in a PWYW 
decision (Waskow et al. 2016). In laboratory, field and survey experiments the researcher 
has full control over the design of the experiment and makes use of random assignment of 
individual subjects to one or more treatments.
Laboratory experiments take place in an environment over which the researchers has 
complete control (e.g., a university’s laboratory). All laboratory experiments on PWYW 
pricing are incentivized, i.e., the subject’s compensation depends on her choices. In all 
laboratory experiments the subjects are students.
Field experiments are similar to laboratory experiments, except that they are run in the field. 
An example is Kim, Kaufmann and Stegemann (2014), who have designed an intervention 
in the field and ran their treatments at two comparable shopping malls. Hence, in field 
experiments in contrast to laboratory experiments, the researcher has less control. A survey 
experiment embeds the experimental design within a survey (e.g., a factorial survey or a 
survey based on vignettes). Usually, the survey consists of hypothetical purchase scenarios, 
and each subject responds to one or more scenarios. Survey experiments are easy to 
administer and, usually, they are computer or internet-based. This allows the researcher 
to generate a large number of observations within a short period of time. In contrast to 
laboratory and field experiments, in survey experiments there is no strategic interaction 
between subjects and the researcher has no control once the experiment has started. 
Involvement might not be as emotionally intense as it is the case in laboratory and field 
experiments (Collett and Childs 2011), and, usually, there are no financial incentives linked 
to the subjects’ decisions. In most survey experiments, the subjects are undergraduate 
students who complete the survey for partial or extra course credit.
In a case study, there is no controlled intervention by the researcher since a case study is an 
observational study. While in field experiments, the researcher chooses the intervention 
(i.e., use of PWYW pricing), in case studies the seller choose PWYW pricing and allows 
the researcher to use the data on sales, revenue, prices, etc. Self-selection is an issue 
because unsuccessful sellers are driven out of the market (see Kim, Natter and Spann 
2010, 152) so that only sellers who use PWYW for short periods and sellers who use 
PWYW successfully over longer periods are observed.

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 172
2.2 Main Results from our Review
Table 1 summarizes the laboratory experiments. For each laboratory experiment, we 
sketch the design and summarize the main findings. In one of the studies (Machado 
and Sinha 2013), real products were sold to students and the latter had to fill out a 
questionnaire regarding their payment motivations. We decided to categorize this 
experiment as laboratory experiment because the context in which the purchase took 
place was controlled by the researchers. Although subjects can differ in their valuations 
for the products, this should not bias the results because subjects are randomly allocated 
to the different conditions. In the other four laboratory experiments, subjects trade 
hypothetical goods, for which the value is induced (see Smith 1976), so that, in contrast 
to Machado and Sinha’s laboratory experiment, students’ true valuations are controlled. 
The goal of these studies is not to identify the motives that drive payments. Rather, the 
goal is to investigate the effect of market structure (Krämer et al. 2015, Schmidt, Spann 
and Zeithammer 2014, also Tudon 2015) and the strategic interaction between multiple 
buyers and a seller (Mak et al. 2015).
Table 2 summarizes the field experiments. For each field experiment, we present the 
experimental design, type of product, payments, duration of the PWYW intervention and 
the main findings. We use the following acronyms for referring to the types of products 
most frequently investigated: experience goods (EG), digital goods (DG) which always 
have quasi zero marginal cost, goods with low marginal cost (LMC). If not indicated 
otherwise, payments refer to mean PWYW payments. What sticks out is that in the field 
experiments, PWYW is applied to low-value items and over short periods of time. The 
highest PWYW payments are payments for a day at a golf resort ($22.95, Machado and 
Sinha 2013), and payments for a photo portrait (€16.12 » $17.40, Kim, Natter and Spann 
2014). In all other field experiments, average PWYW payments are below $10, and in 
many cases they are even lower than one dollar.
Gautier and van der Klaauw (2012) provide interesting results because they find evidence 
for self-selection. Guests, who booked a hotel stay under PWYW pricing in advance, pay 
significantly less in comparison to hotel guests, who have booked the hotel stay at regular 
conditions, but whom are given the chance to PWYW. A convincing interpretation 
is that PWYW campaigns of hotels attract buyers whose willingness to pay (WTP) is 
comparatively low. However, Gautier and van der Klaauw (2012) also report that while 
the campaign is successful in the sense of increasing capacity utilization for unfavorable 
days, PWYW is not a feasible long-term strategy as the share of those guests who have 
little concern to pay anything may increase.
Most field experiments last only for a couple of days. Schons et al. (2013) and Gravert 
(2014) stick out because they analyze repeated purchases. In Schons et al. (2013), buyers’ 
repeated purchases are observed over 8 weeks, and it is found that, at the individual level, 
prices decrease over time. Similarly, Gravert (2014) finds that payments decrease from the 
first to the second purchase.

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 173
Table 3 summarizes the survey experiments. For each survey experiment, we summarize 
data on payments, type of product, experimental design and main findings. In comparison 
with the field experiments, it becomes apparent that in survey experiments, PWYW 
payments for higher-value products are also analyzed. The most expensive product is a 
mobile phone, with estimated production cost of $472 (according to subjects’ estimations).
It should be noted that most survey experiments are based on hypothetical decisions, which 
might result in subjects overstating the prices they would pay (Harrison and Rutström 
2008, Murphy et al. 2005). Such a hypothetical bias might not be a problem if one only 
looks at treatment differences to see whether a specific variable (like the availability of a 
suggested price, for example) affects prices that subjects are willing to pay. Exceptions are 
studies 3 and 4 in Kunter (2015) and Regner (2015), where subjects are surveyed after they 
have made a real PWYW purchase.
Most survey experiments identify variables that influence PWYW payments. Variables 
that positively affect payments are fairness, buyers’ satisfaction (product quality, service 
quality), social norms, information about prices paid by other buyers and information 
about cost. Variables that negatively affect payments are social distance and anonymity. 
The effect of external reference prices is ambiguous and seems to depend on whether the 
reference price is perceived as reasonable or too high.
Another pattern that emerges from Table 3 concerns the types of products. Many products 
are experience goods, like tickets for sauna, cinema, concert, zoo or museum, or drinks 
or meals at restaurants, where quality is known only after consuming the product. In line 
with this is study 1 in Machado and Sinha (2013) in which subjects pay what they want for 
a dinner in an upscale restaurant. Subjects buy a bundle consisting of (at least) the dinner 
and the quality of service. Both parts of the bundle are experience goods, and it is found 
that the quality of the service has the largest effect on payments.
3
T able 4 summarizes the case studies. For each case study, we summarize data on payments, 
type of product, duration and main findings. All products investigated are experience 
goods, and some of them are digital goods (e.g., e-books and music) with almost zero 
marginal cost. There are three case studies which report payments over longer time 
horizons: The e-book seller in Krawczyk, Kukla-Gryz and Tyrowicz (2015), the seller of 
music downloads in Regner and Barria (2009), and the restaurant in Riener and Traxler 
(2012) report results from environments where PWYW has been used for 18 months or 
more.
The study by León, Noguera and Tena-Sánchez (2012) stands out because in this study 
holiday packages with regular prices between $40 and $2,938 are offered under PWYW 
3 There are numerous empirical studies on voluntary contributions to public goods, which do not explicitly 
refer to PWYW. One study, which is noteworthy because of its similarity to PWYW is Borck et al. (2006). 
They conducted a survey among readers of an online newsletter. The newsletter is available free of charge but 
subscribers are asked for voluntary donations. Borck et al. find evidence of conditional cooperation: subjects 
state that they give more if they expect others to give more.

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 174
pricing. León, Noguera, and Tena-Sánchez (2012) show that holiday packages with a 
market value of more than €137,000 earned slightly more than €7,000 under PWYW 
pricing. For the seller, the use of PWYW was everything but a success because 46.5% of 
buyers paid nothing, and only 3.3% paid more than 40% of the regular price. Based on the 
comments in the seller’s blog, the authors argue that buyers chose low prices because they 
perceived reference prices as too high, and because they thought that marginal costs were 
low. Also, cannibalizing effects might be at work: For example, if subjects buy one part of a 
bundle (e.g., a flight) under PWYW and buy another part (e.g., dinner) at regular pricing, 
but have to pay the flight after they have paid the dinner, they might pay less because their 
budget for the bundle is already depleted.

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 175
Table 1: Laboratory Experiments
Reference Experimental Design Main Findings
1 Krämer et al. (2015) subjects’ risk aversions and social preferences were 
measured; several treatments in which sellers with various 
pricing mechanisms competed, focus on sellers’ choices of 
pricing mechanism, resulting market structure, prices and 
profits
compared to name-your-own-price (NYOP), PWYW achieves higher 
market penetration but lower profit; sellers choose PWYW if costs are 
low; PWYW prices depend on buyers social preferences
2 Machado and Sinha 
(2013)
(Study 2)
subjects were told to watch and evaluate a movie, before 
that they could buy a snack; contextual factors (seller type, 
payment time, payment appeal, payment visibility) were 
varied
average payments were $0.30, 60% paid nothing, possibly because 
subjects felt entitled to consume the snack for free; buyers paid more 
for local products if payment is made after the snack is consumed, 
buyers paid more if buyers were satisfied with quality, no evidence for 
image concerns
3 Mak et al. (2015)
(Experiment 1)
PWYW as a threshold public good game; seller was 
simulated; an infinitely repeated game; 8 buyers with 
high or low valuation; if revenue falls below a known 
threshold the seller switches from PWYW to fixed pricing; 
market information was provided (i.e., buyers’ valuations 
were common knowledge); each period buyers chose 
prices; full feedback (i.e., after each period buyers are 
informed about other buyers’ prices and the earnings from 
previous period); treatments different by framing and by 
communication (no communication, suggested payments, 
chat)
no effect of framing, average number of periods was around 190, 
mean number of periods for which PWYW was sustained is 10.50 
(no communication), 35.88 (suggestion) and 167.50 (chat); results are 
driven by buyers with high valuations for the good; these buyers pay 
significantly more in chat-treatment; in chat-treatment subjects often 
coordinate on prices resulting in equal earnings
4 Mak et al. (2015)
(Experiment 2)
similar to experiment 1 but all treatments with chat, with 
or without market information and with or without full 
feedback
the possibility to communicate via chat facilitates the sustainability of 
PWYW pricing even if buyers have less than full information about 
other buyers’ valuations and prices paid by other buyers; chat helps to 
establish a “social contract” about appropriate prices
5 Schmidt et al. (2014) effect of competition is analyzed in two sets of treatments: 
(i) no competition treatments: repeated game with 1 seller 
and 3 buyers, seller chooses whether to enter the market 
or not, seller could invest in quality; (ii) competition 
treatments: 2 sellers and 6 buyers
buyers are motivated by outcome-based social preferences and 
strategic concerns (keeping the seller in the market); no evidence for 
intention-based social preferences; with competition prices are lower; 
sellers who invest in quality made positive profits on average in all 
treatments

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 176
Table 2: Field Experiments
Reference Experimental Design Product Type Payments Duration Main Finding
1 Gautier and van der 
Klaauw (2012)
hotel stays are sold via a 
promotional campaign in 
36 hotels
EG, LMC involuntary participants: €48
voluntary participants: €24
regular prices are €80, €120, 
or €150
2 days promotional campaigns with 
PWYW attracts customers with few 
pro-social reputational concerns
2 Gerpott and 
Schneider (2016)
waffles and crêpes at a 
university campus are sold 
with a posted price or under 
PWYW
EG, LMC posted price: € 0.50
PWYW waffles: € 0.67
PWYW crêpes: € 0.61
2 days customers who decided themselves 
to purchase via PWYW paid on 
average higher unit prices than 
posted prices; offering a product via 
PWYW does not increase demand 
in case close substitutes are available
3 Gneezy et al. (2010) photos in amusement park 
are sold under fixed price 
or PWYW , in 2 out of 4 
treatments half the revenue 
is donated to charity
LMC merchandise revenue per 
individual
p=$12.95: $0.40
p=$12.95 + charity: $0.40
PWYW: $0.42
PWYW + charity: $0.45
2 days per 
treatment
merchandise revenue per individual 
is highest when part of the PWYW 
price is donated to charity
4 Gneezy et al. (2012) in three treatments subjects 
could buy photos in 
amusement park at different 
fixed prices ($5 or $15) or 
under PWYW pricing
LMC ratio of individuals who 
bought product/average profit
p=$15: 23% / $3.45
p=$5: 64% / $3.20
PWYW: 55% / $3.50
boat tour: data 
from 20 cruises 
per treatment
in PWYW fewer individuals buy 
compared with $5; this opting-out 
is driven by image-concerns (not 
knowing the appropriate price)
5 Gravert (2014),
published as Gravert 
(2017)
books at charitable 
bookstore are sold under 
PWYW , two treatments 
depend on whether subjects 
are reminded of their 
membership status
EG, LMC $1.50 (pooled over 
treatments)
2 months members of the bookstore paid 75 
cents more when reminded of their 
membership; members pay less 
when they purchase a second book
6 Jang and Chu (2012)
(Study 5)
subjects buy canned coffee, 
information about cost and 
reference price (i.e., prices 
paid by previous buyers) are 
provided
EG, LMC $0.37 information about cost
$0.42 reference price > cost
$0.30 reference price = 0
3 days on average, buyers paid less when 
informed that 72% of previous 
buyers paid nothing

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 177
Reference Experimental Design Product Type Payments Duration Main Finding
7 Kim, Kaufmann and 
Stegemann (2014)
(Field Exp. 1)
restaurant meals in high-
priced restaurant (drinks 
excluded) were sold, 
external reference price (i.e., 
information about regular 
price) and social distance 
regarding payment (personal 
interaction with waiter or 
anonymity) were varied
EG, LMC €4.20 for products with 
regular price < €5.00
€7.63 for pr. w. € 5.00 < 
regular price. <  €10.00
€10.29 for products with 
regular price > €10.00
3 weeks external reference price and 
reputation of seller (quality of 
the good) have positive effect on 
PWYW prices; product value has 
negative effect
8 Kim, Kaufmann and 
Stegemann (2014)
(Field Exp. 2)
sandwiches were sold, 
external reference price (i.e., 
information about regular 
price) and social distance 
regarding payment (personal 
interaction with waiter or 
anonymity) were varied
EG, LMC €1.19 two days 
per week at 
lunchtime, for 
4 weeks
see above
9 Kim, Natter and 
Spann (2009)
buffet lunch
cinema ticket (regular)
cinema ticket (discount)
deli
EG, LMC €6.44
€4.87
€3.11
€1.94
2 weeks
2 days
1 day
2 weeks
face-to-face interaction, fairness 
considerations and reciprocity 
increase PWYW payments; 
at the restaurant loyalty, price 
consciousness and income drive 
payments
10 Kim, Natter and 
Spann (2014)
(Exp. 1)
comparison of free sampling 
and PWYW for Gilette 
razors; participants were 
surveyed 5 weeks and 1 year 
later
€1.41 2 days 
(promotional 
campaign)
PWYW yields higher repeat 
purchases and is more entertaining 
than free sampling
11 Kim, Natter and 
Spann (2014)
(Exp. 2)
comparison of free sampling, 
40% discount and PWYW 
for photo portraits
LMC PWYW: €16.12
sampling: €0.00 
discount: €26.00
3 weeks 
(promotional 
campaign)
compared to the discount 
treatment, the PWYW treatment 
attracted more buyers and resulted 
in higher revenue

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 178
Reference Experimental Design Product Type Payments Duration Main Finding
12 Kunter (2015)
(Study 5)
potential buyers had to fill 
out a questionnaire before 
they purchased a zoo ticket; 
5 treatments varied textual 
cues in the questionnaire
EG, LMC control: €5.75
economic: €5.51 
avoid neg. feelings: €5.69 
pro-social behavior: €5.98
making excuses: €5.91
10 days pro-social cues yield significantly 
higher payments than economic 
cues; avoiding feelings of guilt is an 
important factor
13 Machado and Sinha 
(2013)
(Study 3)
payments are made after 
playing golf
EG, LMC PWYW: $22.95
fixed price: $31.07
6 Saturdays with PWYW average payments 
are lower, in combination with 
fixed pricing PWYW attracts more 
buyers and increases revenue
14 Schons et al. (2014) during the 8 weeks buyers 
made 1-4 purchases of iced 
coffee
EG first purchase: €0.88-0.99
second purchase: €0.62-0.88
third purchase: €0.50-0.76
8 weeks in aggregate, prices do not 
decline over time but decline on 
the individual level until the 4th 
transaction; buyers have difficulties 
determining seller’s cost
15 Park, Nam and Lee 
(2017)
best-selling beverage items 
are sold in 5 treatments:
(i) traditional PWYW , 
(ii) PWYW with charitable 
giving (PWYW-C),
(iii) PWYW with charitable 
giving plus a suggested price 
(PWYW-CS); benchmarks 
are (iv) fixed price scheme 
with (FP-C) and without 
(FP) charitable giving
EG recorded revenues/net 
revenues (revenues minus 
charity) per customer in $ 
(n=928) 
FP:               5.62/5.62
FP-C:           5.61/4.77
PWYW:       4.59/4.59
PWYW-C:   5.04/4.30
PWYW-CS  6.46/5.44
5days PWYW and PWYW-C attracts 
slightly more customers than 
FP; revenues are highest under 
PWYW-CS, however net revenues 
are highest under fixed prices 
and lowest under PWYW-C; 
suggested prices are important for 
the profitability of PWYW pricing 
schemes  
16 Schröder, Lüer and 
Sadrieh (2015)
in 2 treatments buyers of 
soft drinks either paid via 
PWYW or reduced a given 
price by as much as they 
want (mark-of-your-own 
price, MOYOP)
EG PWYW: €0.90
MOYOP: €0.69
4 x 40 min. per 
treatment
prices are significantly lower with 
MOYOP
DG = digital good, EG = experience good, LMC = good with low marginal cost.

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 179
Table 3: Survey Experiments
Reference Experimental Design Product Type Payment Main Finding
1 Armstrong 
Soule and 
Madrigal (2015)
(Study 1)
subjects are presented with a hypothetical 
online concert ticket purchase scenario; 
treatments differed as to the level of 
external reference prices ($10 or $25) 
and whether they are presented as a 
descriptive norm (“what others have 
paid”) or injunctive norm (“what you 
should pay”)
EG, LMC $17.44 low ref. price and descriptive norm
$25.06 high ref. price and descriptive nom
$21.21 low ref. price and  injunctive norm
$36.76 high ref. price and injunctive norm
in situations without social 
pressure payments are 
influenced by norms and 
reference prices; when reference 
prices are high, payments are 
closer to the reference price 
when the norm is framed as a 
descriptive norm
2 Armstrong 
Soule and 
Madrigal (2015)
(Study 2)
a pretest was used to determine the 
expected price for a concert ticket; 
treatments differed as to the level 
of external reference prices and as 
to whether they are presented as a 
descriptive or injunctive norm
EG, LMC reference price = $20 < expected price
$21.44 descriptive / $23.06 injunctive
reference price = $45 = expected price
$34.18 descriptive / $42.09 injunctive
reference price = $70 > expected price
$52.93 descriptive / $53.59 injunctive
when reference prices are equal 
to the expected price, payments 
are closer to the reference price 
when the norm is framed as 
injunctive norm (in contrast to 
the results of study 1)
3 Dorn and 
Suessmair 
(2016)
McDonald’s Big Mac, in a within-subjects 
design each subject is presented with 
three scenarios which differ in the level 
of social presence and observation, 
first scenario was anonymous payment, 
second scenario was direct contact with 
seller, third scenario was being observed 
by third party, after each scenario subjects 
were asked to rank factors that influenced 
their price
low cost not reported social agreeableness was more 
important in scenarios with 
high social presence and 
observation, willingness to pay 
(WTP) increases from scenario 
1 to scenario 2 to scenario 3
4 Hilbert and 
Suessmair 
(2015)
in a 3 (social interaction: low, medium, 
high) x 3 (norm compliance: low, 
medium, high) factorial design subjects 
indicated their WTP for a travel mug
low cost €12.80 high social interaction
€11.92 medium social interaction
€9.15 low social interaction
(regular price €17.95)
with high and medium social 
interaction subjects’ WTP are 
higher as compared to low social 
interaction; norm compliance is 
not significant
5 Jang and Chu 
(2012)
(Study 1)
for four products (recording album, 
mobile phone, cake, DVD), 70 subjects 
were asked about their WTP and the 
price they would pay under PWYW
varying not reported the distribution of the ratio 
price-paid/WTP is similar 
to the distribution of offer/
endowment in dictator games

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 180
Reference Experimental Design Product Type Payment Main Finding
6 Jang and Chu 
(2012)
(Study 2a)
for recording album and mobile phone 60 
subjects were asked about their WTP and 
the price they would pay under PWYW; 
half of the students had information 
about cost
varying not reported price-paid/WTP ratio is higher 
in cost provision treatment
7 Jang and Chu 
(2012)
(Study 2b)
in a pretest, subjects estimated the cost 
of the mobile phone; average estimated 
cost was $470;in three treatments 120 
students were asked about their WTP 
and the price they would pay under 
PWYW; treatments differed according 
to information about cost ($260, $470, 
$680). Subjects in a control treatment 
received no information
high cost price-paid/WTP ratios
40.23% control
73.18% (cost inf. $260)
72.00% (cost inf. $470)
48.48% (cost inf. $680)
the relation between price-
paid and cost information is 
interpreted as buyers signaling 
fairness; buyers pay less if 
signaling fairness is more costly
8 Jang and Chu 
(2012)
(Study 3)
in three treatments subjects were asked 
about their WTP and the price they 
would pay under PWYW for a mobile 
phone; treatment variation with respect 
to information: (i) none, (ii) information 
about cost, $180, (iii)information  about 
cost together with information that most 
subjects would pay nothing
high cost price-paid/WTP ratios
40.00% (i)
60.00% (ii)
34.00% (iii)
when injunctive norm 
(information about cost) and 
descriptive norm (most subjects 
pay would nothing) are in 
conflict, subjects react stronger 
to the descriptive norm
9 Jang and Chu 
(2012)
(Study 4)
PWYW for Starbucks coffee; treatments 
differed according to the information 
subjects received: (i) fair price is $4.00-
4.50, (ii) fair price is $4.00-4.50 but most 
subjects would pay nothing, (iii) fair price 
is $4.00-4.50 and most subjects would pay 
fair price
EG, LMC price-paid/WTP ratios
72.00% (i)
46.00% (ii)
70.00% (iii)
the influence of a injunctive 
norm (information about fair 
price) is not enhanced by the 
descriptive norm

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 181
Reference Experimental Design Product Type Payment Main Finding
10 Johnson and 
Cui (2013)
(Study 1)
PWYW for concert tickets in four 
treatments; treatments differed according 
to the information subjects received: (i) no 
reference price, (ii) minimum price = $20, 
(iii) maximum price = $50, (iv) suggested 
price $35
EG, LMC $45.80 (i)
$34.45 (ii)
$29.67 (iii)
$34.31 (iv)
reference price has negative 
effect and reduces variance
11 Johnson and 
Cui (2013)
(Study 2)
PWYW for concert tickets in a 2 
(minimum price present or absent) x 2 
(maximum price: present or absent) x 
2 (suggested price: present or absent) 
design
EG, LMC $43.77 (no information)
$49.90 (suggested price only)
$47.00 (minimum price only)
$35.77 (maximum price only)
$32.11 (minimum and maximum)
$42.67 (suggested and minimum)
$39.53 (suggested and maximum)
$34.06 (minimum, maximum, suggested)
external reference prices have 
negative effect on prices paid;if 
external reference price is 
provided, prices paid are closer 
to the reference price (less 
variance)
12a Johnson and 
Cui (2013)
(Study 3)
PWYW for concert tickets, in a 2 
(minimum price $10 or $20) x 2 
(maximum price: $50 or $60) x 2 
(suggested price: present or absent) 
design
EG, LMC $33.04 minimum price = $10
$38.25 minimum price = $20
$33.30 maximum price = $50
$37.99 maximum price = $60
significant effect of minimum 
and maximum price but no 
effect of suggested price;the 
extremity of anchors influences 
buyers’ chosen prices
12b Johnson and 
Cui (2013)
(Study 4)
PWYWfor concert tickets;in all three 
treatments minimum price = $20 and 
maximum price = $60;treatments differed 
according to the suggested price: (i) $30, 
(ii) $40, (iii) $50
EG, LMC $32.62 (i)
$33.58 (ii)
$37.56 (iii)
suggested price affects prices 
buyers actually pay
13 Kim, Kaufmann 
and Stegemann 
(2014)
PWYW for several products (cinema 
tickets, DVD, digital album, flight tickets, 
hotel, rental car, opera, wine), 
online survey which varied social 
distance, product value, external 
reference price, seller’s reputation and 
sales promotion; subjects were asked for 
the price they would pay under PWYW , 
their WTP and the regular price
different subjects paid 65.85% of the regular price 
and 77% of their WTP with respect to all 
products
PWYW prices increase with 
lower social distance, low value 
products and external reference 
prices; seller’s reputation 
and sales promotions had no 
significant effect

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 182
Reference Experimental Design Product Type Payment Main Finding
14 Kunter (2015)
(Study 1)
PWYW for tickets to animal park (sold 
in lecture); real payments but subjects 
received €11.50 show-up fee; study explores 
“motivation-related payment factors”
EG, LMC PWYW prices not reported;
regular price € 4.00
three most frequent answers: 
fairness (58%), reference prices 
(46%), customer satisfaction 
(31%)
15 Kunter (2015)
(Study 2)
PWYW for day ticket for wellness and 
sauna, survey and interview with 91 
subjects
EG, LMC PWYW prices not reported;
regular price €20-25
most frequent answers: 
reference prices (71%), 
customer satisfaction (47%), 
fairness (37%)
16 Kunter (2015)
(Studies 3 and 
4)
survey with 153 and 205 subjects; survey 
with paired comparisons took place in 
museum or zoo after subjects purchased 
tickets, in contrast to other surveys prices 
paid are not hypothetical; prices are not 
recorded
EG, LMC not applicable
regular prices:
€4.50 museum
€14.00 zoo
most important motives for 
making positive payments: 
customer satisfaction, fairness, 
income
17 Machado and 
Sinha (2013)
(Study 1)*
PWYW for dinner in an upscale 
restaurant, in a conjoint analysis, 258 
subjects ranked 12 different profiles; 
profiles differed in characteristics of the 
meal, quality of service, pricing (fixed or 
PWYW) and price paid
EG, LMC not applicable quality of service and fairness 
have significant effect; 
reciprocity is not significant; 
the effect of quality of service 
is largest
18 Marett, Pearson 
and Moore 
(2012)
buyers downloaded projects for an app 
(iProduct) from iTunes App Store, made 
their PWYW payments and completed 
a survey
DG, LMC $0.43 structural equation modeling is 
used; loyalty influences buyers’ 
WTP; price consciousness and 
usage affect the price actually paid
19 Regner (2015) 227 frequent customers (ten or more 
purchases) of an online music label are 
asked in a survey about their payments 
and motives; survey answers are 
compared with the purchases of these 
subjects in the past to control for self-
serving biases
DG, LMC recommended price $8.00 three types of customers are found: 
those who pay the minimum 
price, the recommended price 
and above the average price; 
customers more inclined to follow 
social norms are more likely to 
pay the recommended price; 
the possibility to try the product 
(listen to the music) before the 
purchase positively affects prices 
and is interpreted as evidence for 
reciprocity

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 183
Reference Experimental Design Product Type Payment Main Finding
20 Roy (2015) paper and pencil survey on a 
hypothetical restaurant visit with 300 
students; willingness to pay (WTP), 
internal reference price (IRP), product 
involvement and price consciousness  of 
subjects are recorded
EG, LMC WTP: AUS$ 22.9
IRP: AUS$ 22.3
IRP has the strongest influence 
on WTP; 
subjects with high product 
involvement pay lower prices 
compared to subjects with low 
involvement; highly price-
conscious subjects pay lower 
prices 
21 Santana and 
Morwitz (2013)
(Study 2)*
PWYW for 16-ounce cup of fresh-
squeezed lemonade, online survey 
with 205 M-Turk subjects; social value 
orientation (SVO) was measured and the 
survey primed the norm: (i) communal 
norm in which all profits go to charity, 
and (ii) exchange norm
EG, LMC $2.81 (i)
$1.52 (ii)
subjects pay more when profits 
go to charity; effect of social 
norm depends on SVO: with 
exchange norm pro-socials 
pay more than pro-selves, with 
communal norm pro-socials 
and pro-selves pay the same
22 Santana and 
Morwitz (2013)
(Study 3)*
PWYW for 16-ounce cup of coffee, 
online survey with 546 M-Turk subjects; 
social value orientation (SVO) was 
measured and the survey primed the 
norm: (i) communal relationship norm, 
the description focuses on social aspects 
(e.g., “very warm interaction”), and (ii) 
exchange relationship norm focusing on 
economic aspects
EG, LMC $2.71 (i)
$2.22 (ii)
situational relationship norms 
lead to higher prices, even if 
profits do not go to charity (cf. 
Study 2); pro-socials ($2.62) pay 
more than pro-selves ($2.31)
23 Santana and 
Morwitz (2013)
(Study 4)*
PWYW for coffee plus bagel, online 
survey with 339 M-Turk subjects; social 
value orientation (SVO) was measured 
and the survey primed the norm: (i) 
communal norm, and (ii) exchange 
norm; priming took place in an unrelated 
task
EG, LMC $3.37 (i)
$3.04 (ii)
(suggested price $3.00)
subjects primed with communal 
norm paid significantly more 
than subjects primed with 
exchange norm; priming effect 
carries over; pro-selves react 
stronger to priming

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 184
Reference Experimental Design Product Type Payment Main Finding
24 Thomas and 
Gierl (2014)
WTP for pizza and hotel room is elicited, 
2 (perspective) × 3 (reference-price 
information) × 3 (profit orientation) 
between subjects × 2 (service category) 
within subjects design
EG, LMC € 11.03 pizza
€ 62.13 hotel room
reference prices (inform. about 
what others paid before or 
minimum prices) have negative 
effects, no sign. difference 
between profit and nonprofit 
sellers
25 Weisstein, 
Kukar-Kinney 
and Monroe 
(2016)
(Study 1)
DVD movies, survey study of online 
purchase scenarios, 2 (familiar or 
unfamiliar brand) × 2 (product video 
present or absent) between subjects 
design, experiment tests how brand 
familiarity and virtual product experience 
(potentially reducing uncertainty) affects 
perceived product knowledge, perceived 
quality, purchase intentions and PWYW 
prices
DG, EG DVD retail price $ 19.99
$ 12.03 (unfamiliar brand, video present)
$ 7.86 (unfamiliar brand, video absent)
$ 9.84 (familiar brand, video present)
$ 9.51 (familiar brand, video absent)
only for the unfamiliar 
brand the perceived product 
knowledge, perceived quality, 
purchase intentions and prices 
are positively affected by 
availability of the product video
26 Weisstein, 
Kukar-Kinney 
and Monroe 
(2016)
(Study 2)
16 GB USB flash drive, survey study of 
online purchase scenarios, 2 (familiar or 
unfamiliar brand) × 2 (suggested price 
present or absent) between subjects 
design, experiment tests how brand 
familiarity and suggested price affects 
perceived product knowledge, perceived 
quality, purchase intentions and PWYW 
prices
LMC USB flash drive: suggested price $ 17.99
$ 6.53 (unfamiliar brand, suggested price)
$ 10.37 (unfamiliar brand, no price sugg.)
$ 9.59 (familiar brand, suggested price)
$ 9.01 (familiar brand, no price sugg.)
USB flash drive: suggested price 
for goods with an unfamiliar 
brand reduces perceived 
product knowledge, perceived 
quality, purchase intentions 
and PYWY payments; for 
goods with familiar brand the 
suggested price has no effect 
on purchase intentions and the 
PWYW price
DG = digital good, EG = experience good, IRP = internal reference price, LMC = good with low marginal 
cost, SVO = social value orientation, WTP = willingness to pay.
Additional results to Santana and Morwitz (2013) are reported by Santana and Morwitz (2015) in a 
comprehensive form.

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 185
Table 4: Case Studies
Reference Description Product Type Payments Duration Main Findings
1 Krawczyk, 
Kukla-Gryz and 
Tyrowicz* (2015)
PWYW for bundles of about 5 
e-books, each bundle is sold in a 
7 or 14 days campaign, the mean 
price and the eight buyers who 
paid the highest prices are listed 
on the seller’s website
DG, EG, LMC €5.00 about two years buyers try to match the mean price; due 
to information about payments of others a 
social norm may drive payment behavior
2 León, Noguera 
and Tena-Sánchez 
(2012)
holiday packages and services 
(flights, hotel stays) of different 
price categories
EG, high cost total payment 
€7,011, i.e., 5.1% 
of total value, 
€137,066
2 weeks overall very low contributions with 46% 
of customers who paid zero; explanations 
for low payment are a framing effect 
and a cannibalizing effect caused by 
complementary goods
3 Regner and Barria 
(2009)
music downloads or CDs are 
sold, buyers can choose any price 
between $5 and $18, CD costs 
additional $4.97 for physical costs
DG, EG, LMC $8.20
($8.00 
recommended 
price)
18 months
(September 2003 
– January 2005)
on average payments are considerably 
higher than the minimum price of $5 and 
higher than a recommended price of $8; 
reciprocity as the driver for voluntary 
payments is not confirmed; instead warm 
glow and guilt seem to be motives that 
drive behavior
4 Regner and 
Riener* (2012)
as above, but for two weeks, the 
seller changed its policy so that 
the artist was informed about 
buyers’ names and prices paid;
DG, EG, LMC $7.99 with 
anonymity
$8.05 without 
anonymity
4 months
(September – 
December 2005)
reduced privacy increases payments, but 
effect is not significant; reduced privacy 
decreases buyers by 20% per day and 
decreases revenues by 25% per day
5 Riener and 
Traxler (2012)
lunch or dinner at a restaurant EG, LMC €5.26 2 years average payments modestly declined since 
the start of the restaurant but PWYW 
payments stabilized at about 5€ per meal 
on average; revenues increased due to 
more customers; restaurant has been 
operating for two years in a competitive 
market with PWYW pricing
6 Santana and 
Morwitz* (2013)
(Study 1)
adoption fee at animal shelter EG $110.38
(reference adoption 
fee is $150)
1 month buyers consider transaction in PWYW 
as socially interdependent; outcomes 
of sellers are considered; communal or 
exchange norms drive payment decisions
DG = digital good, EG = experience good, LMC = good with low 
marginal cost
* Working paper

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 186
3. GAPS IN CURRENT RESEARCH
The main results of the studies surveyed above can be summarized as follows. PWYW 
pricing has the potential to increase revenue, even if each single buyer pays less than she 
would pay under traditional pricing. This is because PWYW can be used as a marketing 
instrument to attract additional buyers.
With regard to the motives behind buyers’ payments the following regularities emerge. 
Prices paid under PWYW pricing are positively influenced by social distance, social 
preferences, fairness, strategic considerations like loyalty, price consciousness and product 
quality. With regard to reciprocity and the availability of reference prices the evidence is 
mixed. Several studies (e.g., Regner and Barria 2009, Machado and Sinha 2013) do not find 
evidence for reciprocity as a driver of buyers’ payments. Regner (2015), however, concludes 
that reciprocity drives higher payments in a setting where buyers have the opportunity to 
test the product before deciding about the payment. This suggests that information about 
a product’s quality matters. Also, the effect of reference prices is ambiguous and seems to 
depend on whether the reference price is perceived as reasonable or too high.
It is interesting to see for which goods PWYW pricing is used. Results from our review 
suggest that PWYW pricing is used mainly for low-price goods, and most of these goods 
are experience goods. Moreover, from the review it is apparent that the vast majority of 
empirical studies is confined to short-term observations. These two insights are related 
to the following unanswered questions: (1) What conditions are required so that a seller 
applies PWYW pricing to high-cost goods without making a loss? (2) What are the 
conditions under which sellers can apply PWYW pricing in the long run?
In the following, we address the two gaps stated previously. Since the results from our 
review provide only limited insights with respect to the gaps, the discussion is partly 
speculative. However, we think that the discussion provides fruitful guidance in research 
since the answers are of central importance for theoretical as well as applied studies on 
PWYW . On the theoretical level, the answers will contribute to the literature on behavioral 
pricing (for a game theoretical perspective see Greiff and Egbert 2017). On the applied 
level, the answers to question (1) are of interest for sellers who want to use PWYW pricing 
as a short-term or long-term strategy, and the answers to question (2) are of interest for 
sellers who want to use PWYW pricing in the long run.
3.1 PWYW and High-Cost Goods
If we consider the perspective of a seller, PWYW can, firstly, be considered as a marketing 
strategy with the goal of creating awareness for a new product. Long term considerations, 
such as future market penetration, can be reasons for choosing PWYW pricing in the 
short run. Secondly, in the long term, PWYW can be a viable profit-enhancing pricing 
strategy for experience goods with low marginal costs, such as services, music downloads 
or e-books.

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 187
As a marketing strategy, PWYW can be successful in the short run because it attracts new 
buyers and increases sales. Many buyers might be attracted by the innovative character of 
PWYW pricing (Kim, Natter and Spann 2014), or by the option of making a ‘good’ bargain 
(Shampanier, Mazar and Ariely 2007). Another reason why buyers might be attracted by 
PWYW pricing is the reduced risk of paying too much for a low quality product. This 
holds especially true for experience goods whose quality is only known after consumption 
(Nelson 1970). A buyer, who pays before consumption, is at risk to pay a price she would 
not pay if she knew the quality of the good in advance. This may lead to abstaining from 
purchasing the good at a fixed price. Egbert, Greiff and Xhangolli (2015) point out that 
PWYW-ex-post-consumption can be a viable strategy to reduce information asymmetries 
and to increase sales. This is confirmed in several field and survey experiments, showing 
that PWYW payments increase with the quality of the good provided (Kim, Kaufmann 
and Stegemann 2014, Kim, Natter and Spann 2014, Kunter 2015 and Study 1 in Machado 
and Sinha 2013).
Only a small number of studies examine goods which have relatively high cost and which 
are normally sold at higher fixed prices (e.g., more than 200 USD per unit). Exceptions 
are the sales of holiday packages reported by León, Noguera and Tena-Sánchez (2012), 
with sales between €40 (hotel room for two persons, one night) and €2,938 (a seven-night 
holiday for two persons in Egypt), the hotel stays reported by Gautier and van der Klaauw 
(2012), with regular sales between €80 and €160 and, very recently, the study of Stangl, 
Kastner and Prayag (2017) for dance courses at a dance festival.
For the field experiment by Gautier and van der Klaauw (2012), the third explanation 
seems plausible because PWYW was used as part of a promotional campaign. If buyers 
 
17	
consumption can be a viable strategy to reduce information asymmetries and to increase sales. 
This is confirmed in several field and survey experiments, showing that PWYW payments 
increase with the quality of the good provided (Kim, Kaufmann and Stegemann 2014, Kim, 
Natter and Spann 2014, Kunter 2015 and Study 1 in Machado and Sinha 2013). 
Only a small number of studies examine goods which have relatively high cost and which are 
normally sold at higher fixed prices (e.g., more than 200 USD per unit). Exceptions are the 
sales of holiday packages reported by León, Noguera and Tena-Sánchez (2012), with sales 
between €40 (hotel room for two persons, one night) and €2,938 (a seven-night holiday for 
two persons in Egypt), the hotel stays reported by Gautier and van der Klaauw (2012), with 
regular sales between €80 and €160 and, very recently, the study of Stangl, Kastner and 
Prayag (2017) for dance courses at a dance festival. 
To see the relation between PWYW pricing and profits, consider the ratio of average 
PYWW payment, 𝑝𝑝 , to average cost, 𝑐𝑐 , 𝑟𝑟 =
!
!
. If r>1, a seller makes positive profits, and 
if r<1, a seller makes a loss. Based on the results summarized in the previous section, it 
seems that r is smaller for goods that have higher costs. 
If applied to goods with a low average cost, PWYW pricing can, in the worst case, lead 
to minimal losses because 𝑐𝑐 is small. For goods with a higher average cost, the risk of 
making a loss is larger, because buyers have a stronger incentive to free-ride by paying 
a low price. Although the empirical results show that buyers are sensitive to reference 
prices and cost information, and that buyers are willing to pay higher prices for goods 
that come with higher costs, it is unclear from the reviewed studies whether sellers can 
apply PWYW to high-cost goods without making losses. The results from León, 
Noguera and Tena-Sánchez (2012) and Gautier and van der Klaauw (2012) provide a 
pessimistic outlook, but it appears premature to draw any generalized conclusion 
based on two studies only. Firstly, in both studies, social distance between buyers and 
seller is rather high and this might lead to reduced payments. Secondly, it is possible 
that buyers make small payments because they underestimate production costs (Greiff, 
Egbert and Xhangolli 2014). And, thirdly, buyers might perceive the use of PWYW as a 
marketing campaign in which they are entitled to make payments below cost. 
For the field experiment by Gautier and van der Klaauw (2012), the third explanation seems 
plausible because PWYW was used as part of a promotional campaign. If buyers know that a 
seller does not use PWYW as a short-run marketing strategy, buyers might recognize that the 
seller will stay in business only if payments are high enough, and hence, they might be willing 
to pay higher prices in order to keep the seller in business. 
Although commonsense might suggest that PWYW cannot be successful for high cost goods 
because buyers will take advantage of the opportunity to pay low prices, there is no clear 
evidence for this. Many studies on PWYW pricing suggest that positive payments are driven 
by social preferences, in particular by fairness and reciprocity. Results from laboratory 
experiments show that fairness considerations and reciprocity (List and Cherry 2008; Fehr, 
Fischbacher and Tougareva 2002) are not weakened by higher stakes, suggesting that sellers 
do not necessarily make losses when offering high cost products at PWYW pricing. 
 
3.2 PWYW in the Long-Run 
Our review reveals that most field experiments rely on data that covers comparatively short 
periods of time – at best several months but mostly only a few days. This is different as with 
 
17	
consumption can be a viable strategy to reduce information asymmetries and to increase sales. 
This is confirmed in several field and survey experiments, showing that PWYW payments 
increase with the quality of the good provided (Kim, Kaufmann and Stegemann 2014, Kim, 
Natter and Spann 2014, Kunter 2015 and Study 1 in Machado and Sinha 2013). 
Only a small number of studies examine goods which have relatively high cost and which are 
normally sold at higher fixed prices (e.g., more than 200 USD per unit). Exceptions are the 
sales of holiday packages reported by León, Noguera and Tena-Sánchez (2012), with sales 
between €40 (hotel room for two persons, one night) and €2,938 (a seven-night holiday for 
two persons in Egypt), the hotel stays reported by Gautier and van der Klaauw (2012), with 
regular sales between €80 and €160 and, very recently, the study of Stangl, Kastner and 
Prayag (2017) for dance courses at a dance festival. 
To see the relation between PWYW pricing and profits, consider the ratio of average 
PYWW payment, 𝑝𝑝 , to average cost, 𝑐𝑐 , 𝑟𝑟 =
!
!
. If r>1, a seller makes positive profits, and 
if r<1, a seller makes a loss. Based on the results summarized in the previous section, it 
seems that r is smaller for goods that have higher costs. 
If applied to goods with a low average cost, PWYW pricing can, in the worst case, lead 
to minimal losses because 𝑐𝑐 is small. For goods with a higher average cost, the risk of 
making a loss is larger, because buyers have a stronger incentive to free-ride by paying 
a low price. Although the empirical results show that buyers are sensitive to reference 
prices and cost information, and that buyers are willing to pay higher prices for goods 
that come with higher costs, it is unclear from the reviewed studies whether sellers can 
apply PWYW to high-cost goods without making losses. The results from León, 
Noguera and Tena-Sánchez (2012) and Gautier and van der Klaauw (2012) provide a 
pessimistic outlook, but it appears premature to draw any generalized conclusion 
based on two studies only. Firstly, in both studies, social distance between buyers and 
seller is rather high and this might lead to reduced payments. Secondly, it is possible 
that buyers make small payments because they underestimate production costs (Greiff, 
Egbert and Xhangolli 2014). And, thirdly, buyers might perceive the use of PWYW as a 
marketing campaign in which they are entitled to make payments below cost. 
For the field experiment by Gautier and van der Klaauw (2012), the third explanation seems 
plausible because PWYW was used as part of a promotional campaign. If buyers know that a 
seller does not use PWYW as a short-run marketing strategy, buyers might recognize that the 
seller will stay in business only if payments are high enough, and hence, they might be willing 
to pay higher prices in order to keep the seller in business. 
Although commonsense might suggest that PWYW cannot be successful for high cost goods 
because buyers will take advantage of the opportunity to pay low prices, there is no clear 
evidence for this. Many studies on PWYW pricing suggest that positive payments are driven 
by social preferences, in particular by fairness and reciprocity. Results from laboratory 
experiments show that fairness considerations and reciprocity (List and Cherry 2008; Fehr, 
Fischbacher and Tougareva 2002) are not weakened by higher stakes, suggesting that sellers 
do not necessarily make losses when offering high cost products at PWYW pricing. 
 
3.2 PWYW in the Long-Run 
Our review reveals that most field experiments rely on data that covers comparatively short 
periods of time – at best several months but mostly only a few days. This is different as with 

ECONOMIC AND BUSINESS REVIEW  |  VOL. 20  |  No. 2  |  2018 188
know that a seller does not use PWYW as a short-run marketing strategy, buyers might 
recognize that the seller will stay in business only if payments are high enough, and hence, 
they might be willing to pay higher prices in order to keep the seller in business.
Although commonsense might suggest that PWYW cannot be successful for high cost 
goods because buyers will take advantage of the opportunity to pay low prices, there is no 
clear evidence for this. Many studies on PWYW pricing suggest that positive payments 
are driven by social preferences, in particular by fairness and reciprocity. Results from 
laboratory experiments show that fairness considerations and reciprocity (List and 
Cherry 2008; Fehr, Fischbacher and Tougareva 2002) are not weakened by higher stakes, 
suggesting that sellers do not necessarily make losses when offering high cost products at 
PWYW pricing.
3.2 PWYW in the Long-Run
Our review reveals that most field experiments rely on data that covers comparatively 
short periods of time – at best several months but mostly only a few days. This is different 
as with case studies. Three case studies (Krawczyk, Kukla-Gryz and Tyrowicz 2015, Regner 
and Barria 2009, Riener and Traxler 2012) are based on data about PWYW transaction 
collected over a period of more than a year.
In these case studies, goods with low marginal costs are sold. It is plausible that for these 
goods average payments exceed marginal cost. It seems that for goods with a low marginal 
cost, PWYW can increase profitability by attracting buyers at times when production 
operates below full capacity utilization. With regard to profitability this makes sense if 
there are economies of scale (e.g., due to high fix cost) so that average cost decreases with 
a higher capacity utilization. Digital goods are a specific case because marginal costs are 
zero and a capacity constraint does not exist. For these goods any additional unit sold at 
an arbitrary small but positive price increases profit.
The above literature review finds that PWYW can be successfully applied over long periods 
of time if products have low marginal cost, as in the mentioned case studies. However, 
based on our review, it is an open question whether PWYW can be successfully applied 
over longer periods for goods which have comparatively high marginal costs.
Another important factor which could influence the success of PWYW in the long run is 
the degree of substitutability, which depends on market structure. For instance, if buyers 
prefer the good a seller offers under PWYW and if substitutes are available, buyers have an 
incentive to free-ride under PWYW pricing by buying the good at a low price. The seller 
makes a loss and, eventually, is driven out of business. This is not a problem for buyers 
because substitutes are available. However, if no perfect substitutes are available, the 
incentive to free-ride under PWYW is weaker since driving the seller out of the market 
cannot be in the interest of the buyer.

M. GREIFF, H. EGBERT  |  A REVIEW OF THE EMPIRICAL EVIDENCE ON PWYW PRICING 189
An example for this situation can be lunch or dinner at a restaurant. Riener and T raxler find 
that 81% of the customers of the restaurant studied are regular customers who eat there 
at least once a month, and 50% of customers eat there at least twice per month (Riener 
and Traxler 2012, 477). These regular customers might be an important factor driving the 
success of PWYW at this particular restaurant because they are willing to pay prices that 
cover costs in order to keep the restaurant in business. Arguably, this would be different 
if there were an exact replica of the restaurant which sells at fixed prices (i.e., a restaurant 
where customers could eat exactly the same meals in exactly the same atmosphere). Hence, 
we postulate that over longer time spans, the success of PWYW pricing will depend on 
the availability of substitutes and, therefore, on market structure. This is a hypothesis right 
now and further research into this direction is needed. For example, one could design a 
LE (similar to Mak et al. 2015) in which buyers choose between two goods, one being sold 
under PWYW pricing and the other one being sold under fixed pricing. Across treatments 
one could vary the degree of substitutability between the two goods in order to explore 
how this affects PWYW payments.
Closely related to the discussion of the long run is the question of how buyers’ payments 
develop over time in repeated purchases. Schons et al. (2013) and Gravert (2014) show 
that prices decrease when purchases are repeated. Decreasing prices do not imply that 
the seller will eventually realize losses. In fact, Riener and Traxler (2012) find that a slow 
decrease in average PWYW payments goes hand in hand with an increase in buyers so 
that revenue increases in total.
4. CONCLUSION
In this paper, we provide a review of the fast growing literature on PWYW pricing. We 
review empirical studies on PWYW pricing which report data generated in laboratory 
experiments, field experiments, survey experiments and case studies. W e find that PWYW 
pricing is almost exclusively used in very small segments of consumer goods, mostly for 
low-cost goods, experience goods, or for bundles of goods and services. Moreover, almost 
all empirical studies focus on relatively short time periods.
Furthermore, with respect to the four types of studies (Tables 1 to 4) we conclude that the 
findings are not consistent as regards the identified variables that seem to have an influence 
on payments in PWYW settings. Future research will be needed for the examined low-
price goods due to conflicting results.
With reference to the discussed studies it is also striking that nearly all of those which 
are documented have been conducted in a few rather developed European and Asian 
countries and North America, and that studies related to India, China or Africa have not 
been conducted. This may hint that the level of economic development of a country and 
cultural aspects play also a role in the feasibility of PWYW pricing. Related to this is 
the observation that PWYW is applied only in B2C contexts but that results from B2B 
contexts have not been reported yet.

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Our review shows that despite the current fashion to investigate PWYW, there are still 
several unanswered questions. In particular, it is not clear if sellers can successfully apply 
PWYW to high cost goods, or over longer time periods. To address these issues, we 
provided some tentative answers in the previous section. However, so far, the amount 
of goods sold via PWYW pricing in comparison to other pricing mechanisms is nothing 
more than marginal.
Acknowledgements: For helpful comments on earlier drafts we thank two anonymous 
reviewers of this journal. An early version of this text was published under the title “A 
Survey of the Empirical Evidence on PWYW Pricing” as a working paper in Bulgarian 
Economic Papers (BEP 02-2016). The present text is substantially different from the 
working paper and reviews more studies. The usual disclaimer applies.
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