Pay-per-minute pricing: A field experiment comparing traditional and participative pricing mechanisms

Pascal Sulser

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2021, vol. 92, issue C

Abstract: Several studies have explored the mechanisms that allow customers to participate in the price-setting of products and services. This study contributes to the relevant literature by empirically investigating pay-per-minute pricing in the context of an experience good. Seven hundred forty-two attendees of a temporary science exhibition in Switzerland were randomly allocated to three distinct pricing treatments: pay-per-minute, pay-what-you-want, and fixed pricing. A standardized questionnaire allowed for a comparative evaluation of all three pricing mechanisms. The findings demonstrate that acceptance of pricing mechanisms is influenced by experiential learning; participative pricing is more acceptable to those with firsthand experience. Fixed pricing remains the preferred option for customers to pay; however, pay-per-minute pricing can substantially reduce the average length of stay, without affecting satisfaction with the exhibition and overall shopping expenditure. This finding highlights the potential of pay-per-minute pricing to mitigate congestion issues, which can lead to a reduction in costs. It may also help to enable better social distancing, thus slowing the spread of communicable diseases. Moreover, the inner mechanics of pay-per-minute pricing seem to hold well, as there is a clear relationship between participants enjoying the exhibition and their length of stay.

Keywords: Pay-per-minute; Pay-what-you-want; Fixed pricing; Participative pricing; Experience goods; Consumer behavior; Field experiment (search for similar items in EconPapers)
JEL-codes: C93 D12 D83 L11 M31 Z11 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:92:y:2021:i:c:s2214804321000240

DOI: 10.1016/j.socec.2021.101684

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