Pattern description

The buyer pays any desired amount for a given commodity, sometimes even zero. In some cases, a minimum floor price may be set, and/or a suggested price may be indicated as guidance for the buyer. The customer is allowed to influence the price, while the seller benefits from higher numbers of attracted customers, since individuals’ willingness to pay is met. Based on the existence of social norms and morals, this is only rarely exploited, which makes it suitable to attract new customers.

Inventive problems

Application examples

The Pay What You Want pattern was first applied commercially by the restaurant One World Everybody Eats, based in Salt Lake City, in 2003. In addition to paying what they want for food and drinks, customers can also pay in kind, for example by volunteering to wash the dishes or work in the garden. In the words of founder, Denise Cerreta, the Pay What You Want concept contributes to bringing healthy, good quality food to those less fortunate.

Online music service NoiseTrade was founded in 2006 with the Pay What You Want model in mind. Unsigned artists can promote their music on NoiseTrade by uploading songs to the website free of charge. Music fans can download tracks, and in return donate money. They further support the artists by providing their contact information, a testimonial and spreading the word via social media links and widgets. NoiseTrade receives revenue from website advertising and commissions on any donations made.

In 2010 the Pay What You Want model was applied in the marketing experiment Humble Bundle. Humble Bundle is a website offering online collections or ‘bundles’ of content such as video games, eBooks and music for download. The price paid is set by the customer. A number of incentives are built in that lead to higher revenue: users paying more than average are rewarded with bonus media, and top contributors are listed on the website. In addition, a share of the sale price goes to a non-profit organisation. Humble Bundle receives an average of 15 per cent of the total funds raised through the website, and over the past three years has earned over US $33 million in sales with the Pay What You Want business model.

References

The Business Model Navigator: 55 Models That Will Revolutionise Your Business