Pay what you want — and get what you need

Looking for a cheap date, some budget-friendly culture, or ways to make your next vacation more affordable? Four words: “Pay what you want,” or PWYW.

Theaters, museums, comedy troupes and other organizations may offer PWYW days or nights, where you hand over only as much as you can afford. Think of it as happy hour for entertainment — a way to get out of the house without your budget going off the rails.

How far does it go?

The lively arts aren't the only PWYW option out there.

The past few years have seen food, ride-sharing, music/gaming/comedy/book downloads, an investing service and apps (even one for payday loans) offered at shopper-led pricing.

The benefit to consumers is clear: Rather than pay a set price, you set your own. Vendors may earn less but make up for it in volume — or not. (More on this later.)

Digital products in particular lend themselves to the pay-what-you-will model because, once created, they're cheaply duplicated. Restaurants (which operate on slim profit margins already) and other physical spaces have a different set of challenges.

Good for us, but not for them?

However, it's got to be tough to keep a theater running if a bunch of cheap so-and-sos pay a dollar each, right?

Well, yes and no. Part of an arts group's mission may be to bring culture to everyone. Besides, people who get in the habit of attending museums and shows when they are broke might become subscribers or even patrons later on. Bonus: Those PWYW nights are also great publicity through word of mouth or social media buzz.

Back in 2000, horror author Stephen King published “The Plant” in installments on his website, saying he'd keep writing as long as 75 percent of the readers kicked in at least $1 each. After six installments, he quit — but by then he had earned almost half a million bucks.

E-commerce was not as well established back then. Imagine what he'd make today with that business model.

Yet, while online sales are much more common these days, so is the availability of free stuff. Entrepreneurs face long odds getting people to part with their bucks. Why spend money on music/apps/whatever when you can get them for nothing?

Proponents of PWYW say that musician Amanda Palmer is a great example of bucking the system. But according to DigitalTrends.com, just over half her listeners actually pay. If a fairly well-known performer gets only about a 50 percent buy-in, imagine what new artists and designers get.

Again, it's great for the consumer who can get all sorts of stuff for free or nearly so; it's not as great for the creators, though.

“Letting people value the product”

Tom Morkes, author of “The Complete Guide to Pay What You Want Pricing,” talked with a spokesman for the Gumroad direct-sales platform. “Vendors who switch to PWYW often get average payments that are higher than the initial price of the item,” the official said. In fact, one $3 book sold for an average of $5 when the author chose a “$1+” tag.

Why? “… because you're letting people value the product for themselves.”

In theory, and in the real world

In a perfect world, PWYW is mutually beneficial. Folks on tight budgets can still listen to music, have a hot meal, or take their kids to a museum. When times are better, they can (theoretically) contribute more. In the meantime, artists and entrepreneurs are making some sales and getting their brands out in front of people.

That's a nice theory. But it is safe to assume that some opportunists will, with zero shame, plunk down a quarter to see a show even if they can afford more.

Under the right conditions, some consumers will pay more than asked. A study led by Ayelet Gneezy of the University of California, San Diego, noted that people tend to be more generous if payments help others in some way.

Panera Bread operates PWYW “Panera Cares” cafes in Boston, Massachusetts; Portland, Oregon; Dearborn, Michigan; and Clayton, Missouri. Donations cover about 75 percent of the meals' costs; the company estimates that as many as one in five people pay nothing.

A nonprofit called “One World Everybody Eats” maintains a list of PWYW “community cafes” across the United States. Those in a better place financially can pay more than the suggested donation to help subsidize the rest.

Boosting the budget, or busting it?

Maybe PWYW is the right tool to stretch your limited finances. Keep an eye on the bottom line, however. Although it sounds counter-intuitive, consumer-led pricing can bust your budget and/or crowd your life.

For example, Humble Bundle sells groups of games, graphic novels and other digital products using the PWYW model, with a twist: Consumers choose what percentage of the payment goes to the creators, to charity, and to website operating costs.

Sounds great, right? You get stuff at outrageously low prices and charities benefit.

Trigger warning: I'm about to sound like your mother. If you don't need it, it's no bargain. How many games or other products can you realistically use? Even digital products can become invisible clutter. There really is such a thing as too many choices.

Mindful generosity

Remember the other guy's bottom line too. Just because you can pay a penny for that song or show doesn't mean you should. Actors, developers, musicians, improv artists and museums have to keep the lights on too. Information may want to be free, but people need to be paid.

Readers: Have you ever participated in a PWYW exchange? How did you decide what to pay?

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atulit
atulit
5 years ago

Great post loved it and you write amazing would like to read more from you.

superbien
superbien
5 years ago

Great article! Good good for thought.

Personally, I would not be able to do that kind of event – I wildly over pay. There’s no guilt or angst in a set ticket price, and endless guilt in a “pay based on what you think these human beings are worth”, which is where my brain goes. That gets infinite pretty fast. To avoid months/years of regret, I’ll just go with wild overpayment, just in case. So, knowing my own tendencies, I would avoid such guilt inducing scenarios like it came with a side of bubonic plague.

Donna Freedman
Donna Freedman
5 years ago
Reply to  superbien

I have the same guilt-loop playing in my own head…! When I was really broke it was easier just to pay what I could afford (although it usually wound up being a dollar or two more than I really *could* spare).
These days when I do a PWYW show my partner generally ends up treating. I leave the angst to him. 🙂

erica
erica
5 years ago

A number of museums in NYC are ‘suggested donation’ museums, most notable for me are the American Museum of Natural History and the Metropolitan Museum of Art. I happily pay about $5 per person each time I go knowing full well that these museums are funded, in part, by the city and the NYC taxes I pay.

Chris
Chris
5 years ago

It’s an intriguing model … the fear of failure is high in the minds of many people on this matter, but those that produce items of value have much to gain from it!

Ali
Ali
5 years ago

I’ve never been to a PWYW event but I’ll have to explore options in my area. I usually go to museums when they are free – either thanks to library passes or the free nights that most museums have once a week.

Jason
Jason
5 years ago

It’s not always true, but I think of paying higher prices as convenince fee for not have to deal with undesirable people who can cause problems that can ruin events for everybody else. This can be a nice alternative, but lower prices bring in a certain element to establishments that can almost ruin any experience. Sure you can sit in the bleacher seats of a Dodger game for a dollar, but so can any Tom, Dick, or Harry, and they can easily ruin an event for all other specatators. I don’t tend to run into that at the pricier box… Read more »

Dawn Field
Dawn Field
5 years ago

I’m still waiting for Stephen King to finish publishing The Plant. I was one of the 75% who paid at least a dollar, and was very disappointed when he pulled out after the sixth installment. Today, I would pay full hardcover price to be able to finish reading this book!!

Sam Jones
Sam Jones
5 years ago

Great article!
I think this method of payment shuld replace the common one.
As you suggested, when you have a good quality product, most people will probably even pay more than the original fixed price.
Besides that, PWYW gives a chance to people from all ends of society to enjoy the same events/products.

Mike in NH
Mike in NH
5 years ago

PWYW can apply to sports as well. The Cape Cod Baseball League is a great summer league with some of the best college players in the country and all they ask for is a donation. I’d rather give my money to the non-profit than the very much for profit Red Sox.

Donna Freedman
Donna Freedman
5 years ago
Reply to  Mike in NH

Summer-league ball can be a lot of fun, and PWYW makes it affordable to just about everyone. Bonus: You may see a future superstar when he was just a kid.
If I were a parent of a young child who got restless halfway through the game, I’d be much happier to have paid a few dollars for a seat I wound up leaving early.

Debbie M
Debbie M
5 years ago

It depends on whether the activity is advertised as free or as PWYW. If it’s advertised as free, I pay either nothing or a small amount unless I just loved it or otherwise find them a super-worthy cause. If it’s advertised as PWYW, then I generally pay somewhere between what I consider a discounted price (such as for matinees or dress rehearsals) and what I consider a typical price, again, unless I just loved it or otherwise find them a super-worthy cause. I really hate when something is advertised as free but then they really want donations. I try to… Read more »

Kelli B
Kelli B
5 years ago

Great article – hadn’t heard of this type of promotion before. I think its a great idea as long as you pair it with marketing tactics to ensure you’re getting something in return for the (potential) loss of sales. Ex. word of mouth business.

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