
Pricing Experiments You Might Not Know, But Can Learn From - jayzee
http://conversionxl.com/pricing-experiments-you-might-not-know-but-can-learn-from/
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nlh
I remember a great discussion my class had in our high school Econ class about
why "pay what you want" fails so often:

The basic working theory of an economic exchange between parties is that the
exchange happens because both parties feel like they are getting more value
post-exchange than pre-exchange. I agree to pay you $5 for a sandwich because
I have decided that the sandwich is more valuable to me (in my hungry state)
than this $5 bill (even if only marginally so) and you have decided that $5 in
the register is better than keeping the bread, cheese and meat in the kitchen.
It works. If the sandwich were $20, I might not make the same value judgment.
Possibly even if it were $7.

When you throw "pay what you want" into the transaction, in theory, you're
actually breaking that structure. I'm no longer getting MORE value from the
sandwich than from my money - by definition, I'm getting exactly the same
value.

So even though the consumer is deciding on pricing, that subtle feeling of
"getting a deal" goes away and consumers on the whole actually feel less
intrinsically satisfied with the purchase.

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zizee
Interesting point.

I have only one experience at a restaurant that was "pay what you want" and I
found the whole thing uncomfortable. Am I paying too little? Am I paying too
much? In the end I decided that the uncertainty detracted from my enjoyment so
much that I never returned to that restaurant. I much prefer knowing what the
price is upfront.

On a related note: I also hate stores where you don't find out the price until
you are at the register. It might get a few more dollars out of me the first
time I come in, but I won't come back. I guess it makes sense at places like
airports where you don't have a huge amount of return customer.

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msrpotus
Glad I'm not the only one who feels the same way about it. Even if it's only a
couple bucks difference, the uncertainty adds a whole layer of anxiety for me.

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gesman
1\. I tried "pay what you want" while doing pro photography gig and it didn't
work well at all - people got confused, people didn't know what to pay and
just left without buying anything.

Bottom line #1: people need to be told what to do, including how much money
they need to give.

2\. When selling subscriptions (I'm the author of MemberWing - wordpress
plugin allowing bloggers to sell flexible subscription packages to sell access
to premium content) it is wiser to charge flat fee yearly access instead of
montlhy access. Why? Because what people are willing to pay today is _way_
different from what people are willing to pay tomorrow. Why yearly? Impulse
buyers! When person is excited - he is willing to buy more and pay more.

Bottom line #2: Monetize positive emotion! It may not last long :)

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DigitalJack
"Pay what you want" can give the impression that the seller doesn't believe
what they are selling has any significant value.

Also, it's easier for the average person to "feel" if something is too
expensive or not if it has a real, fixed price. Especially if it is something
that is not necessarily utilitarian, like art.

I agree though. People need to be told what to do. This is one of the drivers
behind frameworks. They reduce the number of decisions and things to think
about for developers. Clearly not the only reason, but a significant one I
think.

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vanni
Previous discussion:

<https://news.ycombinator.com/item?id=4370904>

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brandon272
Is there any data on offering a lower first-months or first-years price on a
subscription deal? (i.e. "Pay $2.99 for your first month!" with "$7.99 a month
thereafter" in smaller print)

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ozh
Awesome article. I'm glad someone has resposted it here.

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kriro
Site's offline.

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peeplaja
HN traffic took it down. Keep trying :)

