TITLE:
Effect of Reference Price in PWYTF Pricing in Tourism Sector
AUTHORS:
Atanu Adhikari
KEYWORDS:
Pay What You Think Fair, Willingness to Buy, Willingness to Pay, Participative Pricing, Reference Price, PWYTF Pricing
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.4,
March
18,
2019
ABSTRACT: While conventional pricing strategy involves sellers
to decide price of a tourism product,
tourism companies carry the risk of capacity underutilization in many
occasions when fixed costs are already incurred. Pay What You Think Fair
(PWYTF) pricing mechanism motivates tourists to pay a fair price for unutilized
capacity, thereby, increasing sales and profit for marketers. This study shows
that PWYTF pricing mechanism with a concrete reference price of customer can
generate significantly higher revenue and profit for a long period of time. We
have conducted three experiments to show that PWYTF pricing strategy is a
profitable and sustainable pricing solution for tourism companies to increase
revenue during off-season as well as underutilization of hired capacity. This
study opens a new avenue in pricing methods used in tourism industry and
contributes in significant way both in academic and practice.