The “Pay what you want” model when it comes to getting more business is always an interesting one – especially since we don’t see it all that often.
It works like this, Basically, a business places no price on his or her stuff, but instead lets individuals decide what they want to pay, like in this example from “Leaving Work Behind” blogger Tom Ewer.
The likely reason we don’t see it too often is because companies are afraid they’ll get taken, with people paying little to nothing for their work.
But if you have a loyal audience who appreciates your work, you might give it a try. And if you already have an offereing that you don’t charge much for, then there’s no reason at all not to test it out.
In fact, you might make MORE with the “pay what you want” model than you do charging, say, $2.99 for that book.
The trick is like anything else – build the value. Show before hand what benefits the product’s consumer will achieve with your product.
You might also test giving the first chapter or video for nothing, and then asking them to “pay what they want” for the rest of the book or series.
Another model to test is “pay what you want” for the first in a series, then “hooking” them in to where they dearly want the rest of the offering. For these you can determine the price.
A variation of this is “pay what you want” for the junior version of something, and then offer your BIG offering at a limited time discount.
Remember the backend. You’re likely to make MORE sales in the “pay what you want” model, which means your list of buyers will grow faster. And it’s people who purchase from you once who are that much more likely to buy from you again.
And then there’s that one product you have that’s not selling well. Linda Formichelli was only selling a few copies of her basic $120 product, while her Premium level sold quite well. So she used “pay what you want” on her basic course, with a $30 minimum.
By making this simple change, she sold 128 basic spots (she usually sold 3) and made over 10 times as much. And her average sale was $44.45 – a full $14.45 more than her minimum price.
Her question is, if she had actually charged $44 from the get-go, would she have gotten as many students? Probably not, because people are intrigued and attracted by the very idea of choosing how much they pay. And people feel good about themselves when they pay more than the minimum.
You can read Linda’s “pay what you want” story here:
Don’t think applies to your business?
Well, then check this out: There is a design agency that only works on “pay what you want.” Whether you’re buying a logo, a letterhead design, a slogan or whatever, you pay what you want. There are a few rules, though, one of which is the buyer must explain why they chose the price they chose, and another is the agency can turn down any work. So if you low-ball them, odds are they will not take your next job.
They seem to be doing well, too. They’ve already completed 76 projects using the “pay what you want” system, and received an average payment for each design.
“Pay what you want” is just novel enough to capture attention and possibly help you in your efforts of getting more business over an ordinary pricing model.