1.
The Control–Effort Trade-Off in
Participative Pricing
How Easing Pricing Decisions Enhances Purchase Outcomes
Wang, Beck, Yuan (2021)

2.
Participative Pricing
• A pricing mechanism that gives consumers some or all control
(e.g. pay what you want) in determining the price paid
Wang, Beck, Yuan (2021)
SELLER
FIXED PRICE PARTICIPATIVE PRICE
BUYER
SELLER
BUYER
SELLER
BUYER
Pay-what-you-want or Name-your-own-price

3.
Participative pricing (e.g., “Pay What You Want”) was an exciting new trend in pricing, but
many companies who adopted this model have reverted to fixed pricing
Wang, Beck, Yuan (2021)
The Misplaced Promise of Participative Pricing
• Priceline’s 2007 Name-Your-Own-
Price campaign with William Shatner
• Abandoned PWYW pricing for
airfares in 2016
• Panera Bread’s 2008 pay-what-
you-want café
• Closed its last remaining PWYW
restaurant in Boston in 2019

4.
An Alternative: Pick Your Price
• Consumers are able to choose
their desired price from a series
of options
Wang, Beck, Yuan (2021)

5.
The Control – Effort Framework
Wang, Beck, Yuan (2021)
Pricing Control: The perceived
level of personal influence over
the final price paid.
Pricing Effort: The feeling of
mental exertion associated with
price determination
Pick Your Price (PYP) enhances
feelings of control but does not
significantly increase pricing
effort.

6.
Pick-Your-Price (PYP)
• Strikes an appealing balance between pricing control and effort.
Wang, Beck, Yuan (2021)
Fixed Price
22%
Discount Price
28%
Pick Your Price
34%
Pay What
You Want
16%
Proportion of Units Sold by
Pricing Strategy
Revenue Generated by Pricing Strategy
$32.40
$40.80
$49.20
$23.60
$64.80
$61.20
$73.80
$16.52
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
Fixed Price Discount PYP PWYW
Profit
Cost

7.
Use PYP with Caution and Careful
Consideration
• Consumer’s shopping motives may change the effectiveness of each
strategy
• Save money: PWYW and PYP are both effective
• Save time: PWYW is ineffective
• The more options provided in a “Pick Your Price” strategy, the more
effortful it becomes
• Purchase Context
• PYP performs as good as PWYW in charity/donation-related purchases but generally
better in regular shopping context
Wang, Beck, Yuan (2021)