“Pay what you want” systems have been tested off and on around the country. Recently, a group of researchers at the University of California tested this policy to see how generous we really are and if such a model would be sustainable for businesses. The procedure was really straightforward; they took the amusement park ride pictures of a 100,000 people (really big sample!), split them into two groups one of which was given a fixed rate and the second an open price, and also told half the people within each group that part of the proceeds went to charity.
The sales were lowest amongst the fixed cost group with the pay as you want members buying almost eight times as many pictures at a higher average price too. Sales generally remained the same when considering charity, but the open ended group spent even more money. Shocking as the results may seem, this isn’t the first time such results have come up. NPR covered several restaurants that tried the same thing with their food sales one of which was a Panera. There were of course those individuals who couldn’t afford to pay much as well as those who gamed the system and chose not to pay for large amounts of food. Despite these factors, the Panera reported higher revenue and profit than a similar control restaurant.
So the truth is, humans really our generous and these kinds of sales method is viable for certain companies. This isn’t to say that Best Buy or any other company could say offer up their iPods, TVs and Game Systems for whatever you wanted to pay nor could Ferrari do the same with their cars. But if some restaurants and other daily service businesses offered “pay as you want”, the poor would benefit and the business just may be a little richer.
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