Has anyone tried a 'pay what you want' pricing strategy?

C

CLKeenan

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Jun 24, 2006
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I was reading this article, Pricing Experiments You Might Not Know, But Can Learn From | ConversionXL and it got me thinking about setting up a pay what you want/donation option on my site.

I run a free high school resource website that provides notes, outlines and practice quizzes. Everything is completely free. Users can get access to 'premium' content by contributing to the site (posting on the forum, adding notes, etc.).

I'd like to give the option for users to 'pay what they want' for premium access and a few other features, e.g. no ads displayed on the site. I'll need to come up with more ideas for features that only they would get that others who didn't donate didn't.

The way I look at it, if a user donates even just a $1 (net) that typically equates to 1000 ad impressions. If a user views between 3-5 pages on my site, that's equivalent to 66-111 unique visits to my site over the course of the year. I would most likely break even at the bare minimum and that income wouldn't be reported in a 1099 from my ad networks (just saying). Or maybe I require a $5 minimum donation to get ads removed forever? Have a tiered system with different 'rewards'?

Our users generally love our site/brand. Unfortunately, they are teenagers without credit cards for the most part. However, if they were to get their hands on their parents credit card, they'd probably be more generous than lschmidt when it comes to leaving a pizza delivery guy a tip (http://www.wickedfire.com/shooting-shit/123371-i-just-left-80-cent-tip.html)

Anyone have any experience here? Would love to hear some ideas/insights.
 


Teenagers are generally cheap, and as you've said don't have cards.

It works with some models where people love you/your brand (e.g. musicians) however you need a client base that has money and a way to easily spend it online.

It's worth a test though - why not just chuck it up for a week and see how it goes?
 
mituozo said:
Teenagers are generally cheap, and as you've said don't have cards.

It works with some models where people love you/your brand (e.g. musicians) however you need a client base that has money and a way to easily spend it online.

It's worth a test though - why not just chuck it up for a week and see how it goes?
Click to expand...

Agreed. Not expecting to make a killing here, it would just be nice to diversify my revenue stream a bit. Relying on ad networks for almost 100% of my revenue and one of those ad networks for 70% of it is just a disaster waiting to happen.

I guess the question is, do I have anything to lose by throwing something like this up there? Could it cheapen the brand image aka we look desperate? Would it make people think we're only in it for the $$$?
 
Do $1 a year on a rebill or $7 for a lifetime membership + ad free. Explain why you need the money. Site has grown and bandwidth is expensive.
 
i've seen a tool where it was donate or tweet, which i always thought was a clever idea, if i could remember the name i would tell you, sorry. probably the most clever part was the CTA underneath of the tweets from people saying they got the tool (probably code showing what they 'favorite'). i bet it converted like crazy

telling the customer that they can do what they want erases a lot of buyers stress i think. never had a chance where i could try something like this.
 
Since I don't know what the site actually is, by that I mean the "Feel" of the site, I can only make a generic suggestion here.


Donation models for Teenagers are usually NOT that successful. And yes, it does kinda give that "I'm POOR so GIVE me money" kinda impression for a resource site.


I may be off base here, but "I" would suggest that you put together some REALLY HELPFUL and TIME SAVING resources that aren't available to the average site visitor.

Put them together for the Premium Members and then MARKET it to your current members for say a 25% to 50% discount. Charge full price for NEW VISITORS for at least 2 to 3 months. (After 2 to 3 months, if the fee based thing seems to be working or even if not, then you can also offer new visitors a discount.)

This way if your current members were to check into the pricing deal they would see that "YOU" have integrity and feel that they got a deal.

You can give like a 3 day (Think Friday to Sunday. Lulz) FREE TRIAL to your current members so they can decide for themselves if it'll be worth the money you'll be asking.

Now, you would need to determine whether you want a one time fee for the year. (I would STRONGLY suggest that an Annual Fee be the LONGEST price model. No Lifetime crap.) or a monthly access fee.

As I said, I don't know the feel of the site, so I can't really help you on the pricing model. But, you were talking about $1 donations and $5 fees.

Market to the Students so that they can get more done in less time and that the Premium Access will make it EASIER for them. Mix in the advertising to THE PARENTS about how this resource will help their children to Learn More, Get Better Grades, and WANT TO LEARN since this resource gives them THE TOOLS they need to learn the MOST that they possibly can.


Sell the Students first, then let the children sell their parents. You just use your marketing to the Parents to HELP the students to get the parents to OPEN THEIR CREDIT LINES!! LOL


If you're not looking to make a lot off of this, I'd say that a $20 annual fee would be THE LOWEST I would try out. Then $10 would be the lowest Monthly I would try out.

On the Monthly You'd figure that 7 to 9 months of the year they would/should pay. Maybe give a discount for paying upfront annually or paying ahead of time for the following year. Again, the monthly model may not do too well. It would depend on the marketing strategy and your site's visitor base.

So, for LESS THAN $100 a year a student can have an edge on life and learn a lot more than just on their own.



Just wanted to give you a few other ways to look at monetizing your site. Nothing is ever set in stone.

TEST TEST TEST TEST.....is the Mantra of the Marketer whether online or in the Brick & Mortar world.


I really don't think the "Donation" or "Pay" what you THINK it's worth would do as well as some sort of Fee based model.

You can always drop back to the donation thing later if the fee Based Model never gets any legs for you.

I wish you well with it.


P.S. I see that others are now supporting your LOW Donation thing. I still have to disagree. $20 a year would be like $2.25 a month (Or .08 cents a day For 9 months.) and just one Premium Member would pay for your Domain Reg.

So, I'll play The Devil's Advocate.

Think Long Term on this. You never know what it "could" do. If you get a decent number of Premium Members either at a LOW $1 a year or the $20 a year you could then maybe market some other products to your Premium Members. I dunno.


I just HATE TO LEAVE MONEY ON THE TABLE.


P.S.S. About the image of "We're only in it for the money" concern. Since it seems that you have enough GOOD & FREE content readily available, it should not be a problem with asking for a fee to access other more advanced or specific content or tools.
 
I think you're underestimating your users. Most teens have a paypal, or at the very least access to a family paypal.
 
skimmed article but there is a "pay what you want" Panera Bread nearby that recently published these stats (estimated/best i can remember)

-35% of people pay less than avg price
-55% of people pay more than av price
-10% of people pay nothing


not sure how that system transfers to the interwebs where no one is watching and there isnt an 18yo blond with a cute panera bread hat to nod when she approves of your valiance, but seems legit :)


put it this way- if you try it, you have to really commit to it otherwise you will be forever "the site that did pay what you want then took it away."
 
Thanks for all the feedback. Especially you Midas. I'm gonna reach out to a few of you and provide some more details and see if you'd change your opinions on anything.
 
Did not read the article, but have you heard of Bandcamp? Their whole model is to allow musicians to sell their work for whatever price they want, and there is always an option to pay more. A lot of bands actually choose to not sell their music for a price at all, and only accept money on this donation-based model.

After their record deals ended, Radiohead and NIN pretty much started the donation-based model for selling their music releases online, and estimates are they make far more money selling their releases off of a donation-based model than they ever had selling through the record company.
 
Instrumentalist said:
After their record deals ended, Radiohead and NIN pretty much started the donation-based model for selling their music releases online, and estimates are they make far more money selling their releases off of a donation-based model than they ever had selling through the record company.
Click to expand...

I was thinking about this example too. Radiohead in particular was interesting because apparently they had a lot of people that bought the album twice, where they would pay $0.01 to download the album and then come back later and pay ~$10, I guess after they decided it was good.
 
shawnhag said:
skimmed article but there is a "pay what you want" Panera Bread nearby that recently published these stats (estimated/best i can remember)

-35% of people pay less than avg price
-55% of people pay more than av price
-10% of people pay nothing


."
Click to expand...


I have a strong suspicion that the numbers would be different in Detroit and Chicago.
 
Zaino said:
I have a strong suspicion that the numbers would be different in Detroit and Chicago.
Click to expand...

Chicago income and unemployment numbers are not too far off from national averages. Some Chicago suburbs are among the richest places in the nation and many of their residents work and go to restaurants in the city.

Chicago has the third highest total population for a US city, so any homicide totals should be compared to that. Chicago is not in the top 20 for homicide rates among cities.


Wrongly accused --You wouldn’t know it, but Chicago isn’t even close to the most dangerous city in America
 
I had to stop doing "pay what you want" with my clients because my bank called to tell me that my account was getting too full.
 
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