Does pay-what-you-want really work?

pay only what you wantAs a business model, it’s apparently a more successful technique than you might think.

When I switched to self-hosting recently, Akismet wasn’t automatically enabled on my new blog. I had to go register on its site to get a key, and decide how much, if anything, I wanted to pay for it. I think the wording on the page was ‘what is Akismet worth to you’? There was a bar on a sliding spectrum, which defaulted to somewhere in the middle (something like $36). As I dragged it down to $0, I felt a slight twinge of guilt. But the pang didn’t last long, given that I was used to having it for free already.

There’ll always be customers who abuse privileges. But apparently at restaurants that offer pay-what-you-want, a lot of people willingly pay more than the recommended price. (That makes up for the other who don’t fork out for the full amount.) After all, nobody wants to look like a cheapskate.

I can’t say I’ve ever visited one of these restaurants – if anyone knows of one in Auckland, holler! – but I definitely would be too embarrassed to pay much less than I thought it was worth. (That said, I do think restaurant food is often heinously overpriced and that our portion sizes are way too stingy.)

I did, however, head along to one of the night shows at the recent International Buskers Festival, which I think ran for about 2.5 hours, though we only caught the last hour. They put on quite a strong sales pitch right at the end, reminding us that our tips would be split between all the acts ($20 per person would be a good contribution, I believe they suggested) and that an equivalent ticketed show would cost about $100; after all, some of the things we saw were really amazing – tricks with bikes, pogo sticks, incredible balancing stunts, fire whips, sword swallowing, and more. Predictably, most of the crowd gapped it pretty quickly straight after the last performer. It was a strong reminder of how we value – or don’t value – what we don’t pay for. Thing is, I doubt many of us would have paid to go see these street acts otherwise. I know I wouldn’t have, and I’m thankful to Auckland City for organising the public show for the 13th year. FYI, all I had was a few dollars in change, so I certainly didn’t stump up $20 myself.

Ever been to a place that offers pay-what-you-will? How would you handle it?

10 thoughts on “Does pay-what-you-want really work?

  • Reply Life [Comma] Etc February 6, 2013 at 12:40

    Love this. When the topic comes up, I always think of that Radiohead album that was first released online pay what you will. I remember it worked very well for them!

  • Reply Mrs. Pop @ Planting Our Pennies February 6, 2013 at 14:15

    I was thinking of the Radiohead album, too! I think Mr. PoP paid a typical $10-$15 to download that album.

    We also pay what we want for NPR (national public radio), and we pay happily, and have increased our donations as our use of the service increased, too.

    All in all, I think pay what you want can really work in some industries. Though ask Northwest Edible Life how it’s working out for blog income… She had an internet tip jar if I recall.

  • Reply MissAmanda February 6, 2013 at 14:27

    Not too long ago, a local film-fest had a pay-what-you-can screening at the theater I work at. I was working in the bar/concession stand, and had nothing to do with the film-fest people, who left 3 teenage girls in charge once the projector, etc. was set up. These girls left the ticket table unattended with a basket full of money and a “pay-what-you-can” sign out. Fortunately no one took the money, but I saw at least a dozen people walk in without even dropping their spare change in the basket. The event, obviously, was a bust.

    I assume if someone was there to interact with the guests that they all would have paid something – even if it was just to avoid embarrassment. But that tactic isn’t going to work if there’s no one there to see it.

  • Reply sp February 6, 2013 at 16:29

    The only thing I can think of is yoga. There are several donation-based studios. I would feel bad paying less than market value for a class, as it is something that I can afford.

  • Reply CF February 6, 2013 at 17:24

    I have heard of a pay-what-you-want coffee shop, though I can’t remember where. I am not sure that these places would make more money from me since I feel like a lot of them are over priced anyways!

    As for buskers, I am in agreement with you – Whether or not I stop and watch a performance, I would not have chosen to go out and buy a ticket to see a show on the street. That means it’s not worth the sticker price of a magic show or concert in a theatre. I’m willing to spot them a toonie or two, but not $10.

  • Reply Pauline February 7, 2013 at 03:11

    I think you attract a few freeloaders for sure but most people are a different crowd, who like to pay a fair price, probably more than what you think your stuff is worth in the first place. I have been to a few museums in London who suggest 5 pounds donations but you can get in for free. I gave some times, other not, the good thing is you can come back in for 20 minutes on a rainy day and it is free, if you spend a full day with visitors, you pay.

  • Reply Budget & the Beach February 7, 2013 at 04:56

    The only kind of place I’ve been to like this is yoga. It was more donation based. I tried to at least get very close to the recommended amount. I’ve never heard about it for a restaurant though. Interesting.

  • Reply Kathleen, Frugal Portland February 7, 2013 at 10:25

    Panera Cares is a non-profit arm of Panera Bread, which is just a fast casual chain in the US. The Panera Cares cafe is pay-what-you-can, and the profits go toward getting people off the streets and back into the workforce. Homeless people can eat for free, while I suppose regular people can too. The difference is that regular people end up paying MORE than they would at a regular Panera. It’s such an interesting business model.

  • Reply Hawaii Planner February 7, 2013 at 10:55

    Dittoing the Frugal Portland comment – I’ve heard the same about Panera Cares. I’ve never been to a place like this, but would definitely not go unless I could afford to pay fair market value. That said, I agree with you on the cost of restaurant meals & typically don’t feel like it’s worth the value, so we don’t go at all.

  • Reply Amanda February 8, 2013 at 10:41

    There’s a few restaurants like that in both Sydney and Melbourne, generally located in trendier inner-city hipster-type suburbs, and generally either vegan or vegetarian. Lentil As Anything is one if you want to get an idea of what it’s like. My experience with them is that I will generally pay what I would pay at a mid-to-low-end restaurant – around $20 for a meal. I can afford it, and that’s what I would normally pay, so why not!

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