Difference between revisions of "Buyer-set pricing"
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I'm using the term "[[buyer-set pricing]]" to refer to either of the following pricing schemes: | |||
==Pay What You Like== | ==Pay What You Like (PWYL)== | ||
This is [[wikipedia:Pay what you want|an increasingly common scheme]], used successfully and profitably to sell software (e.g. {{l/wp|Humble Bundle}}) and music (e.g. [[wikipedia:In Rainbows|Radiohead]]). Buyers pay whatever they want to pay, based (hopefully) on what the purchase is worth to them in terms of what they can afford (the same amount of raw "value" might equate to a lower dollar-amount for someone with less cash to spare, but that doesn't mean they value what they receive any less). | This is [[wikipedia:Pay what you want|an increasingly common scheme]], used successfully and profitably to sell software (e.g. {{l/wp|Humble Bundle}}) and music (e.g. [[wikipedia:In Rainbows|Radiohead]]). Buyers pay whatever they want to pay, based (hopefully) on what the purchase is worth to them in terms of what they can afford (the same amount of raw "value" might equate to a lower dollar-amount for someone with less cash to spare, but that doesn't mean they value what they receive any less). | ||
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* a minimum "floor" price (e.g. to cover the transaction cost) | * a minimum "floor" price (e.g. to cover the transaction cost) | ||
* a "recommended" price (e.g. to break even on production costs assuming a certain number of sales) | * a "recommended" price (e.g. to break even on production costs assuming a certain number of sales) | ||
==Pay What You Can== | ==Pay What You Can (PWYC)== | ||
This is a bit more nebulous and experimental, but I'm thinking it might be done like this: | |||
* I set a "recommended price" | |||
* If you want to pay less, you tell me why (can't afford it, think it's overpriced given the competition) and offer a lower price. | |||
* If I agree that your needs, my expenses, and the value you receive justify that price, I will provide the service at that price instead. | |||
Another model could be income-based -- you plug in your disposable income (based on raw income minus living expenses), and the web site will recommend a price. The price could either be enforced or not; the site could show your claimed income in your user profile, or not. There are advantages and disadvantages to be weighed in any given scheme, and there are probably some decisions to be made collectively as to what values each node's community wants to embrace. | |||
{{wikipedia|Pay what you can}} has an article summarizing the idea but without any specific models. | |||
==Overall== | |||
Both models depend heavily on trust, since the service I'd be providing is essentially a [[wikipedia:Rivalry (economics)|rival]] good (unlike music or games), i.e. making good on each "sale" involves non-zero cost on my end. Therefore I'd initially only offer these options to people whose integrity I respect; if that goes well, I might open up the offer on a trial basis to see how it goes, possibly with a "floor" price to make sure it doesn't become a significant liability. | |||
In the longer term, I could use {{l/ig|credibility management}} to offer these pricing models to people I don't know directly. | |||
Latest revision as of 02:04, 20 December 2014
I'm using the term "buyer-set pricing" to refer to either of the following pricing schemes:
Pay What You Like (PWYL)
This is an increasingly common scheme, used successfully and profitably to sell software (e.g. Humble Bundle) and music (e.g. Radiohead). Buyers pay whatever they want to pay, based (hopefully) on what the purchase is worth to them in terms of what they can afford (the same amount of raw "value" might equate to a lower dollar-amount for someone with less cash to spare, but that doesn't mean they value what they receive any less).
There may or may not be:
- a minimum "floor" price (e.g. to cover the transaction cost)
- a "recommended" price (e.g. to break even on production costs assuming a certain number of sales)
Pay What You Can (PWYC)
This is a bit more nebulous and experimental, but I'm thinking it might be done like this:
- I set a "recommended price"
- If you want to pay less, you tell me why (can't afford it, think it's overpriced given the competition) and offer a lower price.
- If I agree that your needs, my expenses, and the value you receive justify that price, I will provide the service at that price instead.
Another model could be income-based -- you plug in your disposable income (based on raw income minus living expenses), and the web site will recommend a price. The price could either be enforced or not; the site could show your claimed income in your user profile, or not. There are advantages and disadvantages to be weighed in any given scheme, and there are probably some decisions to be made collectively as to what values each node's community wants to embrace.
Wikipedia has an article summarizing the idea but without any specific models.
Overall
Both models depend heavily on trust, since the service I'd be providing is essentially a rival good (unlike music or games), i.e. making good on each "sale" involves non-zero cost on my end. Therefore I'd initially only offer these options to people whose integrity I respect; if that goes well, I might open up the offer on a trial basis to see how it goes, possibly with a "floor" price to make sure it doesn't become a significant liability.
In the longer term, I could use credibility management to offer these pricing models to people I don't know directly.