The role of external reference price in pay-what-you-want pricing: An empirical investigation across product types

This research aims to investigate the effectiveness of the adoption of external reference price (ERP) in influencing consumers' pay-what-you-want (PWYW) final payments across different product types. Results from two experiments show the effectiveness of using ERP as an anchor heavily depends on the nature of the product category. For hedonic products, the absence of an ERP, compared to the presence of one, leads to higher perceived quality and PWYW payments. The results are the opposite for utilitarian products. This study contributes to PWYW literature by investigating how product types affect consumers’ perceived quality of the product offered and their PWYW payments.