We have all, at least once, believed to have paid too much for something, whether it is a vacation, dinner, or cellular phone. It is now possible, however, to pay for a meal according to what we think is fair. “Pay what you want” is a formula that produces a new form of marketing, and is aimed to deliver more appealing services and products to customers. The growing popularity of this trend is the direct investment that the customers have with their desired products. If it is possible to personalize every type of service or product in today’s society, then prices should also be negotiable.
In Längenfeld, Austria 200 people were offered the possibility of a weekend vacation in the snow; and each person chose the price. The tourists were asked to pay an “honest” figure, and to fill out a questionnaire about the quality of the trip. The main objective of this “test” was to gain publicity for the hotels and restaurants in the area, to adapt prices according to the results of the experiment, and to use the gathered information to improve the vacation package.
The same strategy has been adopted by the hotel Ibis Singapore on Bencoolen, where for a limited time it was transformed into a pay-what-you-want structure. Customers paid anywhere from 70 Euro all the way down to 40 cents per room (the equivalent of about $100 and $0.60, respectively). Thousands of people logged onto the website and all of the rooms were booked within minutes on the first the day of the promotion.
In 2010, Panera Bread used the ‘pay what you want’ system at one of their nonprofit restaurants in Clayton, Missouri. Rather than having fixed prices, the menu at “Saint Louis Bread Company Cares” would have suggested donation amounts. The company reported that around 60% of patrons pay the suggested price at the “Panera Cares” branch in Dearborn, Michigan. Around 20% of customers actually pay more than the suggested price. These patrons help subsidize the remaining 20% who won’t or can’t pay full price.
The rising popularity of this new system has put the power into the hands of the customer. Today, every potential customer is empowered in a way that was never possible. Thanks to the internet, people can now find information about every product or service available. Furthermore, websites that allow people to comment on products and experiences help both future customers and the producers create better products and prices.