"Pay what you want" trend

[Poker99]

Bands are starting to tell fans to pay what they want for the CDs they sell, not only on the internet, but also LIVE.

 

http://www.pampelmoose.com/mspeaks/2009/02/how-bands-can-make-more-money-by-not-putting-a-price-on-a-cd

 

The results (see link) seems positive. Maybe because its the beggining, people are willing cause its original and new.

 

What do you think? Anyone here using this technique to stimulate sales?

[Pankot]

My personal opinion is that it's likely to work better "live" than online, for the same reason that honesty boxes can work. Sitting at home on the anonymous, rather depersonalised internet, there is a temptation to lowball even if you really like the music. A significant proportion of the "In Rainbows" downloaders paid nothing or a nominal sum.

 

Put the same person in front of a real human being at a CD stand, with a bunch of people watching, and they will be much more likely to pay a fair price. "Fair" in this context means in line with the amount of utility the purchaser gets from the deal. A CD full of songs I enjoy is going to give me many hours of pleasure - and viewed in that light I'm happy to pay $20 for it, regardless of what it cost to produce. $20 might be more than the band would have priced the CD at for fixed price, so in this case they do very well.

 

I also agree with some of the comments (in the linked story) from those who have tried this out, in that they had a "suggested price." That makes it clear to the audience that you are not just giving away free CDs, and strengthens the "honesty box" effect.

 

The ideal result you are looking for is something like this: suppose your suggested price is (purely for the sake of argument) $9 a CD.

 

A few fans really love the show/the music/your hair and throw you $20.

 

A substantial batch of people give you $10 because they have a $10 bill handy.

 

Lots of people pay $9, because they can't think of a better price to pay

 

Now you've sold to everyone who would have paid $9, had you put up a $9 fixed price. But pulled in more revenue.

 

But you also sell some more CDs at $8 to $4, to people who only have that left in their pockets, or who just don't want to pay more. The "honesty box" effect stops anyone taking the mickey and paying 1 cent.

 

End result; you have sold more CDs and made more revenue - and probably a similar (or better) profit per CD than you would have done at a fixed price of $9.

 

 

Of course this is not guaranteed to happen...