Pay-What-You-Like pricing study is bullish on naming your own price

Discuss

22 Responses to “Pay-What-You-Like pricing study is bullish on naming your own price”

  1. relawson says:

    This is what I’m going to do some day…

    It may be some application, magazine, whatever. I’m going to do a “Pay-what-you-like-after-you-use-it” model. 

    • Patti says:

      This is the old shareware pricing model.  I’ve seen it in use on and off for a couple of decades.

      • relawson says:

        Is it? “Shareware” was a term just getting off the ground when I was getting into the web. I guess I never realized thats what It actually was. NoNags was great back in the day! :)

        • HarveyBoing says:

          Sorry to disappoint, but the idea of “shareware” long predates the web. It had traction long before.

          Hard to imagine I know, but we still used our computers to interact and trade software and other data before HTTP and even to some extent before the Internet. :)

          • relawson says:

            Oh yes, I know. I’m looking at shareware as in how every 12 year old that convinced their parents to sign up for “50 FREE HOURS!!!” of CompuServe or AOL in the early 90′s found out about it. :D

  2. Kibbee says:

    The difference between this study and most pay what you want offerings is that the pay what you want offerings are mostly online and nobody has to be embarressed about being too cheap.

    • rundorkasrun says:

      Totally agree here — if the study does not address pay-what-you-can online, then it’s missing a goodly piece of the puzzle. 

      • snowmentality says:

         It did address anonymous pay-what-you-like, at least (and found people paid slightly more that way).

    • bkad says:

        Maybe the trick would be to make sure the payment website has eyes:
      http://www.ncl.ac.uk/press.office/press.release/item/?ref=1151491586

      Seriously, I’d need to know how people behave while anonymous to be convinced this was a good model.

      • snowmentality says:

         Akismet (the anti-spam plugin) has a really clever system on their pay-what-you-like donation page. There’s a slider for donation amount and a simple face next to it — a circle, two dots for eyes, a curved line for a mouth. As you move the slider up, the mouth curves up into a smile. As you move the slider down, the mouth first straightens, then curves down into a frown.

        You can donate nothing, but then YOU MAKE THE WEBSITE SAD.

        It worked on me. I couldn’t take the guilt trip, and donated just enough to make the face smile slightly.

  3. Deidzoeb says:

    Tips should provide a similar experiment. I’m a total cheapskate, but when I’m at a sit-down restaurant with waitresses or even an ice cream stand with a tip jar, I tend to go over a little bit with the tips.

    • ocker3 says:

       After a really good dinner, I’ve been known to tip the waiters, even though here in Australia it’s not at all expected in many restaurants.

      • saurabh says:

        Here in America, tips are built into waiters’ wages, and if you don’t tip, they are often making less than minimum wage. Tipping is a stupid, classist system. (Which is to say: you should tip in the US, because otherwise you are favoring sub-minimum-wage labor.)

  4. Shinkuhadoken says:

    Pay what you want doesn’t always work out. I was at an organization that tried an “honor system” for paying for a prepared lunch that was brought in every day where you had to put some money in for what you selected in an unattended box (rather than have someone spend the lunch hour collecting the funds). People ate the food all right, but far too few actually paid anything for it. The whole thing had to be canceled for lack of funds.

    I think the problem was that it was gradually accepted that you could pay nothing, and more and more people got comfortable with that idea, even though it meant the end of the program.

    • Chris Frost says:

      I think this type of system works for one-offs, but your experience shows that for ongoing things it doesn’t, I have a similar experience running a weekly BBQ after a pickup ultimate game every week in the summer.

      • Shinkuhadoken says:

        Plus I think the fact there was no one there to monitor the funds played a role as well. Maybe an attendant would have made a difference. Or perhaps not.

        • sweetcraspy says:

          Another tactic would be to make announcements ahead of time indicating how much money was gathered and what that buys everyone.  You need a starter fund, but then you can say “This week we got $X and that buys the following collection of sandwiches every day.” or “This week we got $Y and that buys one box of crackers on Monday.” 

          People will be able to see a direct relationship between how much they put in, how they compare to the average, and what they get out of it.  It could certainly still fail, but it might stand a better chance of working out.

  5. Vincent says:

    A note on the profitability of pwyw. It seems that fewer people purchased (55% vs 64% for 5$) however this reduction of sales was offset by an increased average price of 6.43$.  

    This seems contrary to the typical stated objective of pwyw, of using the flexible pricing scheme to reach a larger crowd. It would have been nice to see data for a perhaps 7$ sales point, I suspect this would have been of similarly profitable compared to the pwyw model. 

  6. wobinidan says:

    Take the ‘Weinerei’ in Berlin as an example.  Many articles have been written about the innovative pay-as-you-like model, and how wonderful it is.   But if you read the reviews on qype, there are a *lot* of people unhappy at the aggressive attempts to get money from the customers.   

    The fact is that for a lot of people, a pay-as-you-like model creates mistrust and worry.  It purports to be more fair, a compromise, but actually punishes nice people and rewards cheapskates.   

    I’ll stick to places that display their prices, thanks.

    • Jonathan Badger says:

      In the Weineri’s case, it seems the model is pretty inappropriate because most people don’t know what a fair price for a glass of wine would be given how different wines can vary by an order of magnitude or more in price. At least in my case, I’d end up either ripping the restaurant off or absurdly overpaying.

  7. Jeremy at Writopia Lab says:

    The non-profit that my wife and I run has been funded almost exclusively by a no-questions-asked sliding-scale-fee system. We do creative writing workshops for kids, and it’s really important to us that we serve a diverse group of kids–and that diversity is evident within individual workshops, rather than have groups of wealthy kids over here and groups of not-so-wealthy kids over there. 
     We’ve been around for five years, and we’re racing to keep up with the growth we’re seeing. 

  8. nimic says:

    Assuming a sample size of 100, the $15 price point nets the most profit.  Especially considering less than half the work has to be performed.

Leave a Reply