Pay what you think it’s worth

Picture 14Years ago my parents when to a concert to raise money for musicians in Sarejevo, the tickets were free. You had to donate to leave. It was brilliant, everyone there was already ready to show support and by the time they’d heard the music they were in a good and generous mood. I’ve always wondered what the ticket “price” really was. I’ve also wondered if anyone else had tried this model.

Today I read of some other cases that have; a taxi driver, a chiropractor and a law firm.  It is another alternative payment structure like “freemium” – where a free model is available, but you pay a premium to get all the features.

I think it works under two conditions.

(1) when you are providing a personal service where clients and supppliers meet each other during the profession of the service, where both parties trust each other and have learnt to communicate. In other words where there’s an existing relationship.

(2) where it’s easy to compare the market price for the service, in the Concert example the attendees were all regular concert goers so knew roughly the price of a ticket. I’m currently having rather massive dental work done, it’s time consuming and complex. Although I know what a regular treatment costs I would probably underestimate the costs of this work.

I think it’s less likely to work where the service is anonymous, for example a retail relationship where it won’t be necessary to return to that supplier, or a service provided by an anonymous corporation – for example an insurer.

I’d like to be wrong, but I suspect without the relationship our own self interest will take over.

photo from arquera via flickr

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4 thoughts on “Pay what you think it’s worth”

  1. Personally, I think it is a fascinating idea, but agree that certain criteria must be met before you could expect anyone to really contribute a fair price. I think I will try to use this idea for some of the volunteer work I do, but not for my business; bit too risky there!
    Love the idea… thanks!

    1. Thanks David, it might not be too risky…. once you’ve built a customer base you could try it with one service. You could even go for a “cost plus” model which is what the law firm had done. EG; you deliver a workshop, aftwards the customer pays you the cost base plus a value component that they decide. Something to think about – it could be a way to help you gauge the value of a new workshop concept!

  2. I agree that it is an interesting model, letting people decide for them selves if they want to pay.

    Yet this is not the model called “freemium” Freemium is made from the words free and premium. It describes a business model where there is a free version, as well as paid for premium products.
    Examples offend mentioned include Flickr, LinkedIn and Skype. All services where there is a free product and the possibility to buy premium products.

    Even though freemium is not as you describe, it still holds great potential for social change. I actually wrote a small ebook about just that
    http://www.freemium.org/idealism/a-business-model-for-a-better-world/

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