Jennifer B. Davis
I hired a doula when my son was born and her published rate was a range. She encouraged her clients to pay whatever they felt fair within that range, based on the quality of the services provided. At the time it struck me as an interesting pricing model. Very collaborative. Very service-oriented. Horribly unpredictable.

The band Radiohead has made news recently by letting their fans pay whatever they want for the new album. The magazine Paste is following suit, allowing people to pick their own subscription price (at least for a couple of weeks).

Following Radiohead's 'pay what you want' pricing scheme for their latest album, In Rainbows, indie pop culture magazine Paste is giving its readers the option of paying whatever they like for a subscription. "We were curious to know what our customers thought we were worth. And what better way to find out, than to let them tell us?" explains Paste President/Publisher Tim Regan-Porter. "While it's certainly a bit unconventional, we also see it as a chance to get our product in the hands of people who could become lifelong fans."

So, part "puppy" strategy (as in, no one wants a dog, until they get a cute, little puppy) and part pricing research, this new tactic may be crazy or brilliant. I love the idea of getting real feedback on the pricing elasticity of a market by allowing people to set a price.

That said, so much of how we view pricing (both from a customer and company perspective) isn't absolute, but relative. If someone could pick their price of a Rolls Royce, would the brand have the same cache? If the marketplace decided that you could only charge $5, for something that costs $7 to deliver, is your marketing "bad" (feature/benefit positioning, awareness, channel coverage) or is your cost structure out of line?
2 Responses
  1. rodschmidt Says:

    Pricing is also relative to what else the customer can buy with the money.

    But that observation doesn't help us.

  2. I guess it does and it doesn't. It can be overwhelming to think of competiting with anything the costs time or money. That would be one heck of a competitive matrix.

    That said, it is a good sanity check to know that nothing is without competition!