Thursday, June 20, 2019

Journal Article on FairPay - "Pricing in Consumer Digital Markets: A Dynamic Framework"

This new paper on FairPay has been accepted to appear in the Australasian Marketing Journal. A pre-print of the full article is now available online.

This complements my previous journal paper -- providing a more complete review of how FairPay builds on participatory pricing methods like pay what you want (and avoids weaknesses in their current forms) -- and expands on how it provides a flexible framework for better pricing that can move the exchange between seller and buyer from the transactional to the relational in a wide range of contexts.

This paper is co-authored with Pennie Frow and Adrian Payne. (The previous paper was co-authored with Marco Bertini, and was published in the Journal of Revenue and Pricing Management in 2018, also available online, and free to all under open access.)

The abstract:
Supplier firms are increasingly seeking new ways to personalize their offers and differentiate their products, especially in contested digital markets.  One approach that shows promise involves encouraging customers to participate in pricing decisions using schemes such as “pay-what-you-want” where the customer has an input into determining the price.  These approaches can benefit both the customer in terms of paying a reasonable price and reducing risk, and the supplier in terms of increasing sales and generating deep customer insights that can assist in relationship development.  However, extant research shows limitations associated with these pricing approaches and, despite some qualified successes, there has not been widespread adoption in businesses. This study extends consideration of existing participative pricing schemes and proposes a new conceptual framework, termed FairPay. This framework overcomes many of the limitations of previous approaches, while addressing important challenges, especially those faced by many digital product suppliers. The framework offers an attractive pricing solution for both customers and suppliers, ensuring an equitable exchange that is based on value-in-use.  We discuss the application of this framework in the context of digital products, where the approach has special promise.
We think FairPay has immediate potential to radically change business practices in a way that puts a powerful new form of dynamic and emergent pricing at the forefront of digital content businesses (as described throughout this blog).  Likely initial applications are for digital offerings to consumers in markets such as journalism, e-books, music, video and other content, as well as games and other apps -- both directly between service providers and consumers, and via aggregator/distributor platforms. But as this paper suggests, "FairPay may be a unifying framework that bridges the gulf between purchases for profit and non-profit donations" (as currently emerging with crowdfunding platforms).

We hope you will read the paper, and find it helpful -- and will let us know what you think.

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Pennie Frow is Professor of Marketing at the University of Sydney. Adrian Payne is Professor of Marketing at the University of New South Wales. My collaboration with them began when I contacted Adrian about his pioneering book on Relationship Marketing, with the idea that FairPay was very aligned with his thinking.  That led to discussions of his more recent work (see Strategic Customer Management by Adrian and Pennie), and an early result of our collaboration was presented at the Naples Forum on Service.

My background is as a practitioner in online media and e-commerce, and the technologies that drive that (bio).

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Resource Guide to Pricing

Drawing on the research in this paper, I have updated my Resource Guide with recent references. The guide is intended to be relevant and accessible to managers and entrepreneurs, as well as to scholars and researchers.

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More about FairPay

A concise introduction is in Techonomy"Information Wants to be Free; Consumers May Want to Pay"

For a full introduction see the Overview and the sidebar "How FairPay Works" (just to the right, if reading this at FairPayZone.com). There is also Selected items (including links to videos and decks). 

The Journal of Revenue and Pricing Management, "A Novel Architecture to Monetize Digital Offerings" provides a scholarly but readable overview. 

Or, read my highly praised book: FairPay: Adaptively Win-Win Customer Relationships.

(FairPay is an open architecture, in the public domain. My work on FairPay is pro-bono. I offer free consultation to those interested in applying FairPay, and welcome questions.)

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