Tom Morkes is an expert at Pay What You Want pricing. In fact, he wrote a book on it. PWYW pricing lets the consumer choose the price to pay for the product or service.
What is the most important thing you can share about pricing?
- Pricing is marketing.
- How you price your products and services is part of marketing, and therefore part of the sales process.
- Pricing is essential early in the process, while you are developing a product or service.
What is Pay What You Want pricing?
- Pay What You Want pricing lets the consumer/buyer decide the price of the product or service.
- It doesn't work with commodities.
- Marketing is more important with Pay What You Want pricing.
- Some people will pay you more if you remove the fixed price.
- The Vennare Brothers' The Hybrid Athlete inspired Tom's interest in this pricing method.
- It is not relegated to products, but can also work with services.
- If you can't express the value you are offering, this pricing method will not work.
- Price anchoring is an important marketing technique for this method.
- A blank space for people to put in any number is not the best option for more expensive products and services.
- If you remove the caps (low and high), people will pay you more than you think they will. It will also remove the barrier to entry on the bottom end.
- You have to be comfortable that some are going to pay less, but a small percent will pay dramatically more, offsetting the lower buyers.
- You need to rely on the people who are generous to sustain you, which is a smaller percentage of the buyers.
How does Pay What You Want compare to other price concepts?
- Crowd Funding is different from Pay What You Want, but they are similar and can learn from each other.
- How do you show someone the value?
- How do you encourage them to be generous?
- Value Pricing and Pay What You Want use tiers or options.
- TIP (To Insure Performance) is a combination of Value Pricing and Pay What You Want. TIP is similar to how bartenders and waiters price.
- Pay What You Want Invoicing – Send a blank invoice and let the customer choose what to pay.
- Experiment and try it out on small projects, like charging for parts and letting the customer pay what they want for service.
- Some examples of Pay What You Want Pricing
- Gumroad is an ecommerce site that supports Pay What You Want well.