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Posts Tagged ‘pay as you wish’

Not So Dismal After All

John List and Uri Gneezy have appeared on our blog many times. This guest post is the last in a series adapted from their new book The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life. List appeared in our recent podcast How to Raise Money Without Killing a Kitten.”

Pay-what-you-want is a bit of an oxymoron for economists. After all, if you had the choice of how much to pay, wouldn’t you always pick $0? But as we’ve found time and again, people are a lot more complicated than typical economists have assumed.

Case-in-point: in 2007 Radiohead made their album In Rainbows downloadable online for whatever price customers wanted to pay. Precise statistics are hard to come by, but one thing is clear: a lot of people paid a good amount of cash for the album. In fact, it was so successful that other acts have followed suit. Heck, even corporations like Panera have gotten into the act, setting up cafes in St. Louis and Chicago where customers pay what they can for certain menu items. 

What got us curious, though, was trying to answer why people were paying more than $0. In particular we wanted to know what sorts of levers could we pull that would induce people to pay more or pay less in an economic environment like Radiohead’s website? Luckily, right around this time we started working with Disney Research, and they were just as interested in these questions.

Pay After You Go?

We’ve blogged extensively about pay-as-you wish pricing schemes. Springwise reports that a Spanish concert promoter is now experimenting with post-concert pay-as-you-wish pricing:

Spanish promoters Caravana de Emerxencia have recognized this problem and addressed it through their upcoming gig, where attendees can decide the price of the ticket when they leave.

The concert is taking place on April 4 at Sala Capitol in Santiago, northern Spain. Four bands will be playing on the night – SkarallaosChotokoeuSkarnivals and Swingdigentes. At the end of the evening attendees can pay whatever price they think the event deserves.

How do you like this plan? How do you think you would respond?

Making a Living Through Pay-as-You-Wish

A TED talk by musician Amanda Palmer explores the concept of pay-as-you-wish funding for artists and performers:  

Right at this same time, I’m signing and hugging after a gig, and a guy comes up to me and hands me a $10 bill, and he says, “I’m sorry, I burned your CD from a friend.” “But I read your blog, I know you hate your label. I just want you to have this money.”

And this starts happening all the time. I become the hat after my own gigs, but I have to physically stand there and take the help from people, and unlike the guy in the opening band, I’ve actually had a lot of practice standing there. Thank you.

And this is the moment I decide I’m just going to give away my music for free online whenever possible, so it’s like Metallica over here, Napster, bad; Amanda Palmer over here, and I’m going to encourage torrenting, downloading, sharing, but I’m going to ask for help, because I saw it work on the street. So I fought my way off my label and for my next project with my new band, the Grand Theft Orchestra, I turned to crowdfunding, and I fell into those thousands of connections that I’d made, and I asked my crowd to catch me. And the goal was 100,000 dollars. My fans backed me at nearly 1.2 million, which was the biggest music crowdfunding project to date.

And here‘s a rundown on other performers who’ve explored the pay-as-you-wish strategy.  

Pay When They Let You

It’s one Los Angeles boutique owner’s answer to the pay-what-you-wish pricing scheme: only open your store to customers you want to let in — and set prices on the spot by sizing customers up. The strategy, she says, has helped her store stay open when other shops around hers are struggling.

Pay What You Can Afford?

The makers of World of Goo, a “physics-based puzzle game,” let customers pay what they wanted for the game — which normally sells at $20 — and a week after the offer, 57,000 people bought the game, bringing in over $100,000 in sales.

More News on the Pay-What-You-Wish Front

We recently posted about a taxi driver who runs his business on a pay-what-you-wish (PWYW) model. In response, a few readers sent along interesting notes.
Gregory Taylor tells us about a law firm in Chicago called Valorem that pitches itself as revolutionary on several fronts, including its use of “Value Line Adjustments” in its pricing:

Wouldn't It Be Nice to Really Pay What You Wish?

So plainly there are limits to the viability of PWYW. But one factor that PWYW pricing calls into play is human conscience: if set up properly, PWYW can make it hard for all but the most callous customer to rip you off.

Honesty Reigns on Boxing Day

As always, we try to bring you the best and latest in honor-payment commerce schemes. Here’s one from a town called Settle in North Yorkshire, England: A shopkeeper in North Yorkshire who wanted a day off on Boxing Day decided to leave his store open and let his customers help themselves. Tom Algie, who runs the Practically Everything hardware store . . .

Smashing the Honesty Box

We’ve written now and again about various honor-system commerce schemes (the Bagel Guy in Freakonomics) or pay-as-you-wish systems for coffee shops, bakeries, music downloads, and the like. Just don’t try this if you happen to live anywhere near Northumberland in England. That’s where a business consultant named James Cookson regularly left out his surplus vegetables, along with a piggy bank . . .

As the Downturn Deepens, the Bagelman Cometh

Photo: davidsilver Americans are eating out less, driving down restaurant profits around the country. But some eateries are doing better. The first is McDonald’s, where profits grew 11 percent last quarter. A recession would seem to be good news for inexpensive food. The second is a plucky, five-year-old community kitchen in Salt Lake City called the One World Cafe. Thanks . . .