Name Your Price

Identity-related purchasing decisions are illuminated by Leif Nelson who shows how cause-related marketing intersects with pay-what-you-want pricing. Nelson contends greater revenue and increased goodwill for corporate sponsors can be directly related. These field experiments at major theme parks manipulated various aspects of the purchasing experience for souvenir action photos. Nelson shares his research group’s results and methodology. Finally, he defines a new concept of “shared social responsibility.”

Leif Nelson and his co-authors, Ayelet Gneezy and Uri Gneezy, published “Shared Social Responsibility: A Field Experiment in Pay-What-You-Want Pricing and Charitable Giving” in Science magazine. They found that while fewer people purchase pay-what-you-want items linked to charitable donations, the price per item rose more than enough to compensate for the slight loss in volume. Total corporate revenue was greater when charitable donations were involved. Purchasers consistently reported feeling more positive about a company that offered pay-what-you-want pricing linked to charitable donations.

The increased revenue for corporations is supported by social norms that encourage generosity towards charities. Nelson explored the possibility that corporations might re-purpose their current charitable contributions to be linked to pay-what-you-want purchases.

https://ssir.org/podcasts/entry/leif_nelson_name_your_price