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Pay What You Want Pricing with Tom Morkes – 016

November 18, 2014 by Kirk Bowman Leave a Comment

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.

http://traffic.libsyn.com/artofvalue/016-Pay-What-You-Want-Pricing.mp3

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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
    • Storyline Conference
    • Humble Bundle
    • Half Elf, by Mika Epstein, is doing a bit of everything.
  • Gumroad is an ecommerce site that supports Pay What You Want well.

About Tom Morkes

  • U.S. Army Veteran, who served in Iraq
  • Attended a 2-day workshop with Seth Godin
  • Author of The Complete Guide to Pay What You Want Pricing
  • Founder of Insurgent Publishing
  • Graduate of the West Point
  • TomMorkes.com
  • Twitter: @tmorkes

Filed Under: Episodes Tagged With: Positioning, Pricing strategy, Psychology

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