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The pay-what-you-want model

Has anybody experimented with allowing your users to pay what they are willing and are able to afford for your product?
As my product has little traction at the moment, I have been toying with this idea for my launch week to potentially stir up a little buzz while being small enough to absorb the cost of selling at a loss.  It may also give me an idea of how much people are willing to pay for the product (if anything).
What do you think?
DanDan Send private email
Friday, March 15, 2013
 
 
You can do this indirectly.

You can offer a discount if someone links to your website, +1s your Google Account, likes you on Twitter or Facebook etc.

You can also offer personal licenses at a lower rate than business licenses.
Marisa Poulain Send private email
Friday, March 15, 2013
 
 
Probably not the best idea.
When you have "pay what you want" price, it looks like you don't know how much your software costs.

But you can try it and share your experience here :)
Kuzmitskiy Dmitry Send private email
Friday, March 15, 2013
 
 
I have observed it bring in money when in those limited time bundle deals that sell 100,000+ copies. Most products there are ones that are classics that are at end of lifetime, or being sold at a special discount just before the next version comes out, which is a paid upgrade.

If marketing yourself there might be trouble. I know a couple people who try to sell their music albums this way, the results have been disappointing.

In this case it's better than a tip link, which almost certainly brings in between $0 and $5 total per thousands of downloads. But only just barely.

So can it work? Yes, but under certain conditions.

If planning to just give it away, is it better than doing that? Probably.
Scott Send private email
Friday, March 15, 2013
 
 
Also, if I was going to use this to figure a good price because I had no idea, I'd ignore the bottom 95% of sales and focus on the top 5% for a reasonable price.

There are those who say you should find the peak of n*p, but those people are wrong since they never take into account in their model either service costs of customer support for those who pay little, or the long term income from upgrades.
Scott Send private email
Friday, March 15, 2013
 
 
Most importantly, if you try this, make sure to set an anchor:

http://youarenotsosmart.com/2010/07/27/anchoring-effect/

and limit supply (limited time offer.)

In other words, say something along the lines of "The list price for this is $X, but this week you can get it for what you are willing to pay."

or perhaps "the first Y buyers each day can pay what they want, counter reset at midnight GMT."
Dmitry Leskov @Home Send private email
Friday, March 15, 2013
 
 
Pricing is a revenue optimization strategy. If you don't have revenue (i.e. no traction), there's nothing to optimize.

Unless you've horribly mispriced your product, you won't see a huge change in usage even if you start giving it away for free.

So, based on little information you revealed, in your case it pretty much doesn't matter if "pay-what-you-want" model works or not in general.

Lowering prices as a promotion is a valid tactic, but only if you already have a captive audience that you can reach easily and cheaply.

If you don't, then advertising your promotion will be as difficult as advertising the product. Marketing catch 22.

Also, if you're talking about software, there's no such thing as "selling at a loss", only "selling for less profit".
Krzysztof Kowalczyk Send private email
Saturday, March 16, 2013
 
 
It's not quite "pay what you want", but check out CodeKit's purchase page: https://incident57.com/codekit/buy.php

4 different prices to choose from.

When I bought it, I chose to pay the maximum. What a sucker :)
Nick Moore Send private email
Saturday, March 16, 2013
 
 
These are all excellent ideas and perspectives.

@Krzysztof
I think you have said the right thing to me here.  Without the website traffic or interest nobody is going to know how much we are selling our software for this week.

So I don't think it is a great idea for a first product launch.  If I had an established product and fanbase and then release another related product, I think it would be a very interesting experiment.
DanDan Send private email
Saturday, March 16, 2013
 
 
@Nick
This reminds me of a trick that some restaurants play with their wine list.  This is based on the theory that when people are choosing wines, they very rarely choose the cheapest wine on the list because they don't want to look tight in front of their date/partner/friends/waiter.  So the cheapest wine that the restaurant buys is not usually the cheapest wine on the list; this will be second or third from the bottom of the list.

How this works on the internet I do not know.  Are people concerned about looking cheap when it's just them and their computer?  That said, I do like the idea.
DanDan Send private email
Saturday, March 16, 2013
 
 
I only have anecdotal evidence, but I gave my software away for free for many months and had a really hard time getting anyone to use it. Once I started charging, selling got way easier. People may value your product more if you set a certain (substantially high) price.
Jason Swett Send private email
Saturday, March 16, 2013
 
 
> Are people concerned about looking cheap when it's just them and their computer?

I think that would depend on who I was paying. If it was a big faceless corporation I couldn't care less; I'll pay the minimum necessary as long as it doesn't affect what I'm getting. If it was a small business where in knew the owner was looking at the payments and would personally see my name next to an amount, I might be tempted to pay more than the minimum.

If you wanted to do that I think a personal approach would probably be better; I think the buy page on the codekit website was a good example.
Jonathan Matthews Send private email
Saturday, March 16, 2013
 
 
"If you wanted to do that I think a personal approach would probably be better; I think the buy page on the codekit website was a good example."

I see he's totally against giving refunds, though.  In fact, he specifically makes you check a box that you agree NOT to ask for a refund after purchase.  Wonder how well that's working, considering: (a) I can get a refund from my credit card company anyway (which also penalises him as a result), and (b) that's assuming I'd even risk buying from him after seeing such an anti-customer-service attitude in the first place.
Harry Phace Send private email
Saturday, March 16, 2013
 
 
Hmmm... we'll, we've had this discussion recently and I don't agree with his refund policy - I just didn't notice it on first read.
Jonathan Matthews Send private email
Sunday, March 17, 2013
 
 
If you think it's a good idea, maybe try it for a limited period and see what the results are? 

Getting pricing right is notoriously difficult, and a lot depends on the product. 

For example, a blog article by one of the members of this site (iirc) said that TrialPay was a complete disaster for them, on one of my products I pretty much doubled my monthly takings using TrialPay but on another product I found pretty much the same result as he did. 

I can imagine "pay what you want" working well for software that people get passionate about - only example I can think of at the moment would be Firefox (of course that's free - but you get what I mean, there are a lot of Firefox "evangelists" and if they did charge I think some people would be willing to pay over the odds)

For most software I can't really see it working, but that's just gut instinct rather than proven fact.
John W King Send private email
Friday, March 29, 2013
 
 
you would need an absolutely unique and killer application for this to work. and not just you saying your new widget is truly unique.
Contractor Send private email
Wednesday, April 10, 2013
 
 

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