[Case Study] How a Pay-What-You-Want Pricing Model Can Generate More Revenue

[Case Study] How a Pay-What-You-Want Pricing Model Can Generate More Revenue

Reader Comments (43)

  1. I really like this post. I’ve thought about the model but not implemented yet – mainly because I wasn’t sure how to set up the shopping cart to accept those pay what you want payments. Now that is a pathetic excuse! You’ve inspired me to go beyond that and find the solution so that I can try this fo rmyself.

    thanks Linda πŸ™‚

  2. Super Interesting, I really liked this post. Especially for sharing the results with us. I believe this model was successful because it focused on the volume aspect of getting learners not the the cost per student. So even though you had a lower price you pulled in more students and and get more profit than you would of if you just stuck to your price. πŸ™‚

    Nice one Linda

  3. Really interesting! ThankΒ΄s alot for sharing! I must try this for my next product – perfect timing! =)

  4. AMAZING!! And thank you for the brilliant idea! Question–what service do you use for your shopping cart? I have been using PayPal, but they don’t have a button where people can pay what they want. I need to find a service like this so I can try this method for myself.

  5. Love this idea. I guess the next challenge could be ‘how to get repeat-customers to pay more in the future’ so they don’t associate you with a price and instead, continue to associate you with a level of value.

  6. I wonder how this approach would compare to just pricing low (but not so low that people suspect a cheap product). I think of CK Louis’ successful experiment–he made one million I believe in 12 days. Of course he’s got a huge audience, and he did a lot of things right (AMA session on Reddit), too, that built trust. I think he’s since repeated the procedure, and there was at least one copycat. I wonder how he would have done if he would of used the pay-what-you-want pricing model. I don’t think the bands (Radiohead, NIN) who used that model have used it again. I think I know your answer, but would you do it again?

    • That’s a question I’d like answered myself. But I get the feeling that no matter where you eventually price your product, if it’s on the low end you can earn more by doing Pay What You Want on top of that — as long as you have a great product — because people tend to pay more than the minimum just to show you how much they value you.

  7. Linda,

    I’m one of your subscribers who took advantage of your pay what you can offer. The price point made my decision a no brainer. The first time was such a charm, that I took advantage of your offer with Carol Tice. You can break the bank purchasing information products only to find that most of it just doesn’t work for you. This is a great pricing model!

  8. I love this idea. I am just starting to rebuild my presence on the web after having been gone for awhile. When I have re-established myself I’m going to write and publish an ebook and I think your idea of having one product that is interactive and another that is just the basic ebook is a great idea. Thanks so much for sharing this with us.

  9. I’ve noticed this “pay what you want” is slowly turning into a quiet trend. I’ve seen several people do it: Dave Navarro, Naomi of IttyBiz, and a few others. I suppose it’s a variation of the e-book giveaways that people were doing a while back.

    I think even more important than bringing in revenue, the pay-what-you-can model builds a tremendous amount of loyalty. Your readers know this is a real product, since they’ve seen it on your blog and heard you pitch it in e-mails and posts. Many of them probably wanted to buy it, but couldn’t/didn’t buy it when it was last offered.

    So giving your readers a chance to buy it on the honor system is a win-win: your readers now trust you (because you trusted them) and on top of that they may even feel they owe you one. I’d be interested in seeing some numbers on whether those buyers were more likely to purchase products from you in the future, and if so, how much they were willing to spend.

    • So true. And I’d also like to know how using Pay What You Want impacts sales of additional products. As you can tell, I’m not super scientific about my testing for pricing. πŸ™‚

      • Although I’m also not the one to ask (Kissmetrics are pretty good at this stuff), I would imagine that the purchases of people who use Pay What You Want could probably be tracked through their customer ID or through an auto-responder.

  10. What has intrigued me here is the idea of offering an additional product, such as an ebook, with this pricing model. As a content provider, it would be quite difficult to tell a magazine I write for to pay me what they want for it and still put in the hours of research and interviews to make it happen — or be motivated to do so. But an ebook of value that my clients would appreciate with the pay-what-you-want model is absolutely worth considering!

  11. I’ve seen some bloggers who are in very small niches do this, but never saw anyone blog on the results. The only problem I would have with this is that there is very little data on pricing. So how do you upsell, create downsells and price out the rest of your analytic s? I would rather spend money and test out 3 price points….

    • Yes, that’s a good question. It’s so hard to know what a good price point is for various products. I use a lot of trial and error. $120 hardly sold any. $30 sold tons. Would something in between do better? Someday maybe I’ll try that out.

  12. I’ve tried this model once myself and did see that it generated more sales on the front end. BUT how many of them actually finish the work and implement? I saw less accountability and action from those who paid less. Wondering what your experience was?

    • That’s a really good question. I don’t have much luck tracking completion rates because with the Basic version of my course, there’s no email support — students get 8 weekly lessons plus twice-weekly motivational/informational emails. I often get students emailing me after the 8 weeks to let me know they finished the course, but other than that it’s hard to know. Also, there are no time limits since there’s no email support and I never change the passwords to the lessons, so some students go back to the lessons weeks or months after the course has ended.

      It would also be hard to extrapolate because before I would get only like 2-3 Basic signups and now I get more like 30-40.

      In short…that’s something I’d like to know!

  13. This is really amazing post Linda. I really like the idea with shopping carts agreement with pay what you want payment; sounds so interesting stuff; sounds such a crucial implementation. I can’t wait to give a trial on such. I really loved this and it is an attention-grabbing idea many bloggers has given back on without their knowledge. Thanks that you have opened the eyes of many where I’m first included. Waiting for the next shout out, keep up Linda!

  14. Hey Linda, I’ve been thinking about this – and hearing about it – a lot recently, so it’s timely I came across this via Twitter this morning πŸ™‚

    I know the stats are all based on virtual products, but I’ve been thinking for some time that I might try this for a “physical” product – I have some handpainted silk scarves that are end-of-season, and I often get emails from a small number of subscribers saying they love my work but can’t afford my prices.
    Your article today has me thinking even more about setting a minimum price for these scarves, and seeing what people will pay above that.
    You’ve definitely given me food for thought πŸ™‚
    Have a gorgous day!

    • It would be really interesting to see how this works with your product! The Kickstarter project I mentioned that did Pay What You Want was for an actual board game, so it seems it should work!

      • Hey Linda, I’ll keep you posted when I’m ready to test this out, and glad to hear it worked for the board game – gives me new hope πŸ™‚

  15. I’m going to try this pricing model… It sounds like a fantastic way to find out what people are prepared to pay. It would be interesting to do a survey at the end and find out if people would have paid more (or less) after consuming the content.

    Ian McConnell
    Western Australia

  16. Hi Linda. Great case study. One question:

    Did you post anywhere near the buy button a “suggested” or “minimum” or “valued at” price for guidance? Or did you just leave it blank and let them decide ANY number to pay? (Including one dollar if they wanted.)

    Just trying to figure out if they had guidance from you on what they “should” pay.

    Thanks Linda… Eric

    • I let potential students know on the website that it’s Pay What You Want with a minimum of $30. PayPal doesn’t have a way to set a minimum, so I just trust that people will do it right…and out of the 200+ students who have used this, I’ve never had a problem with anyone paying less than $30.

This article's comments are closed.