[3][4] Many common PWYW models set the price prior to a purchase (ex ante), but some defer price-setting until after the experience of consumption (ex post) (similar to tipping).
These models can eliminate fear of whether a product is worth a given set price and the related risk of disappointment ("buyer's remorse").
For sellers it removes the challenging and sometimes costly task of setting the "right" price (which may vary for different market segments).
[4] While most uses of PWYW have been at the margins of the economy, or for special promotions, there are emerging efforts to expand its utility to broader and more regular use (see "Enhanced forms" below).
PWYW is also an effective tool for penetrating a new market, perhaps to introduce a new brand, as even consumers with a very low valuation can pay small amounts for the same product.
For one source,[7] a successful PWYW model has a: This strategy tends to be more effective when relating to digital products or services.
In a 2012 follow-up research paper, Gneezy and colleagues found PWYW may deter some customers from purchasing.
Their results show: "individuals feel bad when they pay less than the 'appropriate' price, causing them to pass on the opportunity to purchase the product altogether".
[25] In a series of controlled laboratory experiments, Klaus M. Schmidt, Martin Spann and Robert Zeithammer (2014) show that outcome-based social preferences and strategic considerations to keep the seller in the market can explain why and how much buyers voluntarily pay to a PWYW seller.
Instead, the existence of a posted-price competitor reduces buyers' payments and prevents the PWYW seller from fully penetrating the market.
A study conducted by researchers of the Ruhr-University of Bochum examines repeated transactions in a pay what you want environment.
This might be a profitable strategy if it attracts risk-averse buyers, increasing the consumer base and allowing economies of scale in production.
This is used in the Humble Indie Bundle, which has a buyer-directed charity component to further increase buyer willingness to pay.
[34] The Fair PWYW architecture and how it builds on modern digital content pricing strategy has been outlined on the Harvard Business Review Blog.