Pay What You Want Pricing (PWYW) pricing allows customers to literally pay any amount they choose for a product or service, including nothing. It empowers the buyer to fully decide the price.
- Common for arts, entertainment and small businesses using fair-trade principles
- Buyers may pay full, partial or nothing based on perceived value
- Goal is to remove financial barriers and boost access, goodwill
- Revenue comes from average of all payments, not marginal costs
Challenges include loss of pricing control and profits relying on customer generosity. To encourage higher averages, sellers may offer premium perks to those paying more or set minimums.
Studies show PWYW can increase profits through gains in goodwill, customers and sales volumes. It also enables sellers to test different markets. Overall, profits depend on product, marketing and ensuring customers feel value matches their payment.