‘pay what you want’ business model

Over the last couple of years, there have been many ‘pay what you want’ price models applied to certain products. A coffee shop in the US applied this business model back in early 2007.

A similar story was Radioheads’s ‘In Rainbows’ album launched in late 2007.

This was at a time when people had money too, so it was even more admirable. Rather than fight pirates and sue as many as possible, they decided to take the high road and say ‘download our album for free on our official website, no strings attached’. It was a risky move but clever at the same time…

It would mean more people would listen to their music (if they’re getting it for free), so there was the possibility they could sell out arena tours, sell merchandise etc… to make up for the money they’d lose in lost album revenue.

With the rise of open source software, many developers will create plugins and applications for free, but they’ll have a ‘donation’ option in the hope of getting some kind users who appreciate their work.

Today, championship manager 2010 announced a similar price model. For those unfamiliar with championship manager, it’s a popular football management game… I happen to own a championship manager game that’s 8 years old and to this day, it’s still the most addicting game i’ve ever played.

[youtube]http://www.youtube.com/watch?v=6ht7Iu8eLYE[/youtube]

The last game i bought, was Call of Duty 4 for the PC, and technically i didn’t buy the game, i just bought codes online for multiplayer. Because this championship manager is ‘free’ though, i’ve preordered mine.

Total cost £2.51. There’s a £2.50 transaction fee and then you can pay whatever you want on top of that, so i paid 1c. The offer is open until september 10th. After that, the game will retail at £19.99. I’m an example of someone who would NEVER in a million years buy this game in a shop. But because it’s such a great deal and i’m vaguely interested in the game, i’ve given them £2.51. That money would not be in their coffers had they not launched this ‘pay what you want’ price model.

Who knows, i may refer other people or tell my friends etc… 😉 You can quickly see why this business model works, if only temporarily… i’m telling 400+ people about this offer which is driving more traffic to their site, possible getting more sign ups, creating more hype etc…

It’s clever marketing, even if it isn’t original. It will work and it’s good to see. If only all music, games, food etc… were all be priced this way :mrgreen:

1 thought on “‘pay what you want’ business model”

  1. This is an interesting concept.Especially the example you have provided earlier with that band Radios.This shows that who ever thought at that had a brilliant mind in marketing.

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