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This short module looks at the pricing model that allows customers to choose the price. It talks briefly about the advantages and disadvantages and lists some examples.
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(Stanford BUS-21)Martin Westhead
Mastering Marketing
Donations / Pay What You Want (Can)
How to make money by giving things away
Overview
Pay What You Want Model Examples
- Radiohead “In Rainbows”- Disconnect.me- Canonical (Ubuntu)- So All May Eat Café and Panera Bread- Vimeo Tip Jar
Pay What You Want (PWYW)
Buyer chooses price – sometimes $0 Includes “Tips” Attractive to buyers
- Avoids “buyers remorse” - Removes adversarial nature of price setting
For seller- Avoids costly (risky) pricing decision- Addresses varying value perceptions and price
sensitivities in buyers
Pay What You Can (PWYC)
Sometimes used synonymously with PWYW Often more charity / social causes
American Museum of Natural History
Radiohead “In Rainbows”
Early download offered as PWYW
What did people pay?- $0 - $20- Average $6
Most commercially successful Radiohead Album- 3M copies- $80 deluxe set 100K- 30K copies in first week (even 2
months after PWYW)- 1.2M tickets sold for tour
Disconnect.me
Privacy solutions company
Tip Jars
Launched by Vimeo in 2012
Content creators easily add a Tip button
85% goes to creator Plus and Pro only Also offer Paywalls
and Adshttp://www.reelseo.com/vimeo-ushers-video-monetization-tip-jar/
Donate buttons
Available on - Blogs- Open Source Downloads
Integrations with CMS- Wordpress- Jumla- Drupal- Tumblr
Software download issue- Often see value long after
donation opportunity has passed
Canonical
Creators of Ubuntu- Linux distribution
Downloads are free but…
Encouraged to pay for feature requests
So All May Eat (SAME) Cafe
Non-profit in Denver, CO Pay What You Want Restaurant “Making Healthy Organic Food Available to all” Accept an hour of work for food too Costs
- $2,000 a month for rent- $2,000 for the food- Average meal costs $2
Revenues- Average donation $3.66
http://en.wikipedia.org/wiki/SAME_Cafe
Panera Bread
Chain of bakery-café restaurants in US and Canada
2010 created Panera Cares CEO Ron Shaich based the idea
on SAME Cafe in Denver, Colorado
Dearborn, Michigan; Portland, Oregon; Chicago; and Boston
Each site serves 3500 per week
http://en.wikipedia.org/wiki/Panera_Bread
Overview
Pay What You Want Model Examples
- Radiohead “In Rainbows”- Disconnect.me- Canonical (Ubuntu)- So All May Eat (SAME) Café and Panera Bread- Vimeo Tip Jar