Ever since the Post Modern Times cafe in Minneapolis ditched its price list, half the customers have chosen not to pay. It's still making a profit.
What is Pay What You Wish?
Pay what you wish (PWYW) is a well-known, if not exactly common, pricing strategy whereby the buyer sets the price of a given commodity. You can choose to pay any amount, often as low as zero, or as high as you like. The underlying idea is to establish trust between a seller eager to provide value or expand market share, and a fair-minded buyer who will pay a fair price.
How It Works in Practice
As soon as the struggling cafe became a "free and donation-based" restaurant in January, business began booming. Now 40-50% of customers don't pay, but the rest do. Running on donations means the cafe doesn't have to pay tax on sales, and the staff are also volunteers working for shared tips and community donations.
Other Examples
Museums such as the Met in New York use a PWYW entry fee for residents and students. The fashion retailer Everlane tried a PWYW sale back in 2015. Radiohead self-released their 2007 album In Rainbows as a PWYW download. Research showed that 62% of fans paid nothing, and the average overall price per download was just $2.26. Yet it was still more than the share Radiohead would have got by selling at full price through iTunes (about $1.40).
When it comes to charitable aims or promotional buzz, the PWYW model has its place. It relies on goodwill and community spirit, as seen in Minneapolis, a friendly, liberal city united in its staunch opposition to ICE agents targeting immigrants in the streets.
