lermit

Well, it's just by volunteer donation (price). Not strictly free. Maybe the scones are free.

.lermit

egretman

It's a great country. Every notion is revisited eventually. I wonder if hitting your thumb with a hammer still hurts?

jdshipley

Did he read about your donut seller? Maybe, if he had, he'd have located more blue collar than Izod collar!

rahul_rc

A restaurant in New York tried a similar thing - it was profiled in the New Yorker. It wasn't free, but there were no set prices. You paid what you thought the meal was worth. The owner said there were far fewer freeloaders than she had expected, and that the average amount people paid was far higher than she would have had in the menu.

I think its an interesting sociological experiment - peer pressure & guilt is only part of it. There's also an element of the reciprocity impulse, and darn it, just plain old decency.

prosa

Some museums have long done something similar with "suggested" admission prices.

phineasgage

Perhaps this is the solution to the intellectual property conundrum. Instead of coming off as heavy-handed, money-grabbing bullies, the record labels could offer their catalogues for free, and people will pay whatever they think the songs are worth.

Though I have a feeling the internet somewhat diffuses the social responsibility effects that make this work in real life.

Mango

It's very unsurprising that the coffee shop was opened by a software developer with Google. It has certain parallels to the corporate work environment in that company.

Google has moved away, to some extent, from the traditional corporate structure whereby work is done by allocating it through a hierarchy. Instead, the structure has been loosened, and strong incentive structures are put in place for employees to do work that provides value to the company.

They use two types of incentives: financial and social. Developers have a large amount of freedom in the work they do, but they can only attain large rewards by making meaningful contributions to corporate goals. The social reward is directly fostered by the company: it goes out of its way to provide open recognition of the people who are best contributing.

The concept of doing a good job so that other people know I am doing so seems similar to the idea of paying for coffee so that other people don't think I'm a freeloader.

It's actually a fascinating experiment. Most corporations work internally as planned economies, but Google is attempting to be a free market.

A good description of the basic principles of the system is here:
http://steve-yegge.blogspot.com/2006/09/good-agile-bad-agile_27.html
(Ignore all the bits about software development paradigms)

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pkimelma

Yes, I have to say that this works better when there is face to face interaction (than say by internet). It also works better when it is a small community and you are more likely a regular. Note that paying nothing is more highly visible that the article suggests. Unless you fake inserting money into the box, the fact that your hand did not go to your money and then box would be easily seen. I would guess that many make a show of putting money in (as they do with tip jars), so as not too seem crass.
What will be interesting is whether the average amount goes down, up, or stays the same over time. Are people likely to round down when they do not have the amount they wanted, or round up?

ajinkya

there's a similar model of business for a hotel in australia run by a modernist artist.. dont remember the exact detail though.

craz8

I live right around the corner from Terra Bite in Kirkland. This business model makes me feel uncomfortable when I'm there - did I put enough in the box? Did I put too much? I really like having a fixed price to pay.

I'm uncomfortable with tipping too, for the same reason.

A real paying cafe just opened up next door to Terra Bite, so we'll see how traditional compares with this new model.

pkimelma

craz8, tipping is not the same, since there is an accepted formula (percentage). So, you can be comfortable with 15-20% (unless an economist, who supposedly are poor tippers) based on quality of service. I agree that not knowing what to pay puts a burden on the customer. At least Museums have a "suggested donation" level approach. I would guess that most try to remember what they pay at some other store and use the same. Of course it is unclear if you are allowed to ask for change to put an exact amount, so further complicating the process.
I also note that this differs from honor-system bagels/donuts/coffee, since those tell you how much you are supposed to put in. The fact that some put in extra to compensate for their stingy co-workers is different because many do so to maintain the service (so have an incentive which is not altruism).

synapticmisfires

Apparently, from the article they also accept credit/debit cards, which was my main concern, because the would exclude a lot of the market. However, I think they are probably going to get below what they should since although the presence of a payment is public the quantity of any payment is very private.

ajinkya

off point.
do any of u guys, know of a study of disparities between purchasing power from rural/urban devide of different nations?

one of my cousins from a village came to live with us. He is appalingly unambitious. He is happy with a Rs.2000/month job. apparently it was enough in our ancestral town to live with. I graduated recently, and refused an offer of Rs.15000/month (for preparing for GRE n stuff.. hopefully should get an admit from syr or boston). But i consider Rs.15000/month is decent starting salary (though IT guys can start higher)
now,my peers in Bombay do get similar pays as i would, but have almost twice as many expenses.
so i guess, the disparity is a reflection of the aspirations.

Now, one of my frnds from Kerala was telling me, that in kerala there isnt such stark disparity between towns n villages n cities.
Now why is that? better governance? better connectivity? what?

how does this map out in other countries? In US, where farmers are apparently a minority, and they get trillions of $$ in subsidies.. i dont think there would be as big a chasm of purchasing power. or is there?
or lets talk of japan. do they have villages any more? [:p]

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ajinkya

or i have got my basic woefully wrong?

ajinkya

and another question.
I was reading about the debate of full capital account convertibility. South East Asia had it bad. west is pushing for it. So my question is..
if that happens, and if there is no cap on the quantum and flow.. can i possibly just make money through the difference in the rate of inflation of two countries [kaching! :P nice idea, isnt it?]
please ignore, if i am being stupid..i am quite unbaked in economics. i got interested in economics after reading freakonomics, and thats about 2 months ago. :p

lermit

Well, you should move on to Samuelson's intro now. A professor once explained to me what arbitrage meant. It sounded so boring I'd rather go to Atlantic City.

.lermit

rara avis

There's a favourite Indian vegetarian restaurant "Annalakshmi" of mine in Kuala Lumpur, Malaysia that operates on the same principle. The resto has been going on for years and seems to be doing ok, if not well. Believe it has branched out to Singapore and Australia now, see http://www.annalakshmi.com.au/history/

Not sure about the other places but certainly in KL, I believe majority of the patrons put in far more than their bill because of the guilt; and or the concept; and or the karma; and or all of the above.

A typical weekend crowd would be a mixture of the chi-chi; the middle class; the disenfranchised; the homeless; artists; monks and backpackers.

bkw

I wonder how this would work if, say, folks who paid got different coloured cups from folks who didn't. And folks who paid more (above some arbitrary amount set by the proprieter) got the super special colored cups.

nachiket

Just in case anyone is following India..There's the Kala Ghoda Festival going on in Mumbai , India (great treat for art / movie buffs - movies are screened FREE)..what do we do after movies??..eat..but I noticed that the area is heart of Mumbai and everything is expensive. So I walked down to a small old restaurant called "Sassania" that serves Parsi cuisine. I noticed that it served very healthy portions of meals at extremely modest price...any clue how they managed to do so in a place where the land rent would eat off ALL your profits? I guess the turn over of clients and sustained quality service helps them to get past the break even very decently. Considering that the total bill was not that big, i wasn't bothered about how much the tip should be. If i calculate, then I certainly over tipped. I am not sure about the economics part; but here's what I feel - The meal was great and very low priced, my friend liked it as well (we both were pleased), that possibly allowed me not to think too much about the tip and be generous, And yes, I do intend to go there again.
So apart from social pressure of tipping just rite..its also about how you feel about the place, service, quality, etc etc.

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psteinx

There's a big difference between a suggested price/donation, and a totally freewill price.

The former is reasonable. Most folks will pay the suggested price, unless they're not satisfied with the experience. It's not much different from a money-back guarantee. There will be a bit of free-loading, but also probably a bit of overpaying (tipping the owners...)

The latter strikes me as an interesting novelty, but a weak concept for deployment on a broad basis. I agree with the other posters that these situations, when I've encountered them, make me uncomfortable. I would probably be inclined to overpay because I don't want to feel like a cheapskate/freeloader, but I'd also be uncomfortable overpaying. Just tell me how much you want for your coffee. Let me feel happy when I feel like I'm getting a bargain, and let me choose another cafe if I feel I'm being overcharged.

Another aspect to this that makes me uncomfortable is the idea that everyone will likely be paying a different price. It reminds me of going on an airplane, where you never know whether you're a chump or not without spending far more time than I prefer to in comparing prices...

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