January 25, 2009
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Pay What You Want
Three businesses near Frankfurt — a buffet, a movie theater, and a deli — experimented recently with pay-what-you-want pricing, a la Radiohead.
The bad news? In the buffet, customers paid,on average, 20% less than the previous posted price.
The good news? Overall traffic to the buffet increased 30% — leading to a net gain in revenue.
(Via.)
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Comments
This is indeed intriguing, and I hope it means what it seems to mean.
But I wonder: would the buffet policy work in the absence of fixed-price competitors, who establish a kind of base in consumers' minds? Wouldn't the price tend to fall lower, faster in isolation?