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Latest Pricing Insights

Pricing Strategy Review: Is pay-what-you-want the way to go?

Posted by PriceBeam on September 27, 2016
One can argue if "pay what you want" really is a pricing strategy or not. But let's say it is. At least for those customers who actually pay. "Pay what you want" is exactly what the term mean. You offer something to your clients, and they decide if they want to pay for it or not. These customers have a choice of paying or not. Another way of thinking about this pricing strategy is an honor system. 

There are a few well-published occasions where a "pay what you want strategy" has worked very well. In music, artists have offered their product for download in return for a payment of the customers choice.  Having customers pay for downloaded music, or not, works because the cost of a download is virtually nill, and anything an artist may receive for an album or a song is better than what they would receive if it is pirated and better than the minuscule compensation they receive from the music streaming sites. But for artists, there is another variable, the network effect. As an artist, you would want people to listen to your music, to talk about you, to talk about your music. For your band or you personally to become a brand. To use the brand value to drive visitors to the concerts and shows.  So a "pay what you want" model for an artist has little to do with making profits on the thing you sell.

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Topics: Pricing, Pay-What-You-Want-Pricing, Pricing Strategy