Posts Tagged ‘pay what you can’

I’ve often wondered if a pay-what-you-want model could work for all the parties involved. I know Panera tested an approach that allowed well-wishers to pay for food that someone else couldn’t afford, but I believe that they eventually closed it down.

Another approach was covered in a recent Providence Journal article.

John Kostrzewa wrote, “Customers are always questioning the price — and they’re not the only ones.

“Stephen Atlas, an assistant professor of marketing at the University of Rhode Island, has been trying to find some answers. Atlas, who has a background in economics and a doctorate in marketing from Columbia, has been doing experiments in a local restaurant to learn what people will pay.

“He’s trying to advance existing studies of the ‘Pay What You Want’ model deployed in some urban areas, where customers decide on the price of a good or service. …

“Atlas has added a new twist to the research by asking what would happen if a vendor used a different strategy called ‘Rebate What You Want’ that would allow customers to get back what they have already paid. …

“The test worked this way: At the end of a meal, 231 randomly selected diners were given a card with one of three payment options, which differed from table to table.

“The options on the cards were: They could pay any portion of the menu price. They could agree to pay the posted price but request a full or partial rebate immediately. Or they could pay full price and later mail in a rebate form to get back up to a full refund. (The URI grant helped pay for the rebates.) One set of diners also received a regular bill with no card as a control for the test.

“The results showed the payment options did affect how much diners wanted to pay for their meal. The diners paid the most up front if they picked the option to mail in the rebate later. They paid less up front if they picked their own price directly. And they paid the least when they picked their own instant rebate. …

” ‘The most surprising outcome was how much diners paid across all the options despite being told when they received their bill that they could have received a free meal,’ Atlas said. Including the tip, ‘diners in all the pay-what-you-want conditions paid more than the asking price.’ ”

More here.

Photo: The Atlantic

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The music of avant garde composer Kenneth Kirschner is open source, free to experiment with.

Other musicians are looking for sales models that may render hidebound and  unimaginative music labels obsolete.

Allan Kozinn of the NY Times describes what Rabbit Rabbit Radio is doing.

“With some help from George Hurd, a composer and music administrator, [Matthias Bossi and Carla Kihlstedt] produced a blueprint for Rabbit Rabbit Radio and started the Web page in February 2012. The plan was to release a new song for subscribers on the first of every month.

“Along with the song, Ms. Kihlstedt and Mr. Bossi, who are married to each other, began posting video clips, slide shows and photo albums; information about the making of the track; essays on various subjects; and lists that might include links to clips by other musicians whose work they admire or notes about restaurants they have discovered on tour. Past releases can be explored in their online archives.

“Subscribers pay $2 to $5 a month. (There is no difference in access; it’s a matter of paying what you can.) …

“So far, 18 months into the project, Rabbit Rabbit Radio has nearly 900 subscribers.”

More here.

Pay-what-you-can usually relies on some people paying more than they would ordinarily pay for the product. Theaters offer it occasionally, but they could never survive just on that. Panera Bread struggled with the model when it first tested it in St. Louis.

John has told me about a video-game payment model that requires people to pay small amounts for tools that can help them win the otherwise free game. Sometimes, he says, there’s a pop-up in the intense middle of the game that says you have to wait eight minutes to continue but if you want to keep going right now, you can pay a small amount.

I think if you are motivated enough, you will pay a small amount for almost anything. I hope the approach works for Rabbit Rabbit.

Photo: Gretchen Ertl for the NY Times
Matthias Bossi and Carla Kihlstedt, with their daughter, 4.

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Panera Bread has set up a foundation to fund Panera Cares, a pay-what-you-can opportunity for buying baked goods, sandwiches, and meals.

“The concept was born during the tough days of the recession. [Panera co-chief executive Ron] Shaich saw a television story about a cafe in Colorado that fed everyone at whatever price they could afford, which he said inspired him to find ways for Panera to address ‘food insecurity.’ …

“By May 2010, the first Panera Cares had opened in Clayton, Mo., a suburb of St. Louis. For the first one and others since then in Dearborn, Mich., Portland, Ore., and Chicago, Panera Cares sought locations that are easily accessible by public transportation and that attract economically diverse customers. …

“Panera’s vendors contributed to the [Boston] effort, giving about $80,000 worth of free furniture and lighting, along with cameras and and coffee. The rest of the money needed to open the store, an estimated $1 million, is being absorbed by Panera Bread’s corporate operations.

“ ‘It is a community cafe of shared responsibility,’ [Kate Antonacci, project manager of Panera Cares] said. ‘One of the goals of this charitable program is to help ensure that everyone who needs a meal gets one and to raise the level of awareness about food insecurity in the country.”

The Boston Globe’s Jenn Abelson has more here, with a follow-up on the successful first week in Boston, here. See the Christian Science Monitor‘s take, here.

Will you go? Will you pay full price or a bit more for others?

Photograph: John Tlumacki / Globe Staff
The Panera Cares Community Cafe opened in Center Plaza on January 24 with a pay-as-you-can approach.

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