Pay-What-You-Want Pricing for Mobile Applications: The Effect of Social Information and Privacy Assurances

摘要

The market for mobile apps is expanding quickly. Customer value for these apps is determined not only positively by app utility, but also negatively by the perceived privacy risk which associated with disclosing sensitive private information such as customer identity and geographical location. Currently, the most common app price is one to two dollars-similar to that of a single song from an album on Apple iTunes. Because of the social nature of many of these apps, and the characteristics of the primary user base (those ages 18-29), we examine how the pay-what-you-want pricing model-which has been successful in certain instances in the music industry-would work in the market for mobile apps. Using a theoretical model based on social information and reference pricing and an empirical experiment involving 1079 participants, we find that privacy assurance is the largest contributing factor to a customer's willingness-to-pay for mobile apps.