

How to Maximize Pay-What-You-Wish Pricing - cwan
http://freakonomics.blogs.nytimes.com/2010/07/20/how-to-maximize-pay-what-you-wish-pricing/

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nkurz
It's odd that there is no mention here of the difference between maximizing
revenue and maximizing profit. It says "new research suggests that the true
path to maximizing profits is to combine pay-what-you-wish pricing with an
appeal to charity" but makes no reference to the cost of goods sold.

If you have a product that costs you $6, selling it to 1/2% of the people at
$12.95 is a whole lot more profitable than selling it to 5% at an average
price of $5.33 and then giving half of the proceeds to the charity!

This doesn't make the study uninteresting, but it definitely limits the
applicability to many real world products that do not have astronomical
markups. It also makes it very unclear why the chose to compare pay-what-you-
want to a single fixed high price, without even testing revenue for lower
fixed prices.

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jcl
How would the Humble Indy Bundle sale have fared had they done things
differently? This study suggests that it was wise of the Indy guys to give
part of the purchase price to charity, as it encourages people to pay more on
average.

However, the study also theorizes that the reason people pay more is that they
don't want to appear uncharitable. Presumably the anonymity of the internet
would reduce this motivation, relative to the study's souvenir stand.

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coryl
The indy bundle had a marketing appeal to it in that they were indy developers
(not a big corporation), and that they were giving to charity. They had a ton
of press coverage because of this, and not for any other reason in particular
(the game bundle selection was OK).

I think short term factors like media coverage skew results. How effective
would the next Indy bundle be? And the one after that? And after that? It
would be a fallacy to then say that as sales and donations dropped, consumer
behavior somehow changed.

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ido

        the game bundle selection was OK
    

At least 2 of the games (world of goo and braid) were some of the best known
and most highly acclaimed indie games of the past 5 years.

4 of the games (Aquaria, Gish, World of Goo & Braid) were IGF winners.

These were not your run-of-the-mill indies, they were already profitable and
well known games before it.

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jcl
Braid was not part of the Humble Indie sale.

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ido
Sorry, my bad.

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viggity
Assuming 10000 visitors to the park

Flat Price No Charity: 10000 * .005 * $12.95 = $647.50 to park only

Flat Price Half Charity: 10000 * .0059 * $12.95 * .5 = $382.03 to both park
and charity

Name Price No Charity 10000 * .0839 * $0.92 = $771.88 to park only

Name Price Half Charity 10000 * .0449 * $5.33 * .5 = $1196.59 to both park and
charity

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tjmc
It's not quite that simple. All the proceeds to charity may be profit but the
proceeds to the park are revenue. The printing costs of #3 are almost 17 times
higher than #1, so that could put #1 in second place.

