(Stanford BUS-21)Martin Westhead

Mastering Marketing

Donations / Pay What You Want (Can)

How to make money by giving things away

Overview

Pay What You Want Model Examples

- Radiohead “In Rainbows”- Disconnect.me- Canonical (Ubuntu)- So All May Eat Café and Panera Bread- Vimeo Tip Jar

Pay What You Want (PWYW)

Buyer chooses price – sometimes $0 Includes “Tips” Attractive to buyers

- Avoids “buyers remorse” - Removes adversarial nature of price setting

For seller- Avoids costly (risky) pricing decision- Addresses varying value perceptions and price

sensitivities in buyers

Pay What You Can (PWYC)

Sometimes used synonymously with PWYW Often more charity / social causes

American Museum of Natural History

Radiohead “In Rainbows”

Early download offered as PWYW

What did people pay?- $0 - $20- Average $6

Most commercially successful Radiohead Album- 3M copies- $80 deluxe set 100K- 30K copies in first week (even 2

months after PWYW)- 1.2M tickets sold for tour

Disconnect.me

Privacy solutions company

Tip Jars

Launched by Vimeo in 2012

Content creators easily add a Tip button

85% goes to creator Plus and Pro only Also offer Paywalls

and Adshttp://www.reelseo.com/vimeo-ushers-video-monetization-tip-jar/

Donate buttons

Available on - Blogs- Open Source Downloads

Integrations with CMS- Wordpress- Jumla- Drupal- Tumblr

Software download issue- Often see value long after

donation opportunity has passed

Canonical

Creators of Ubuntu- Linux distribution

Downloads are free but…

Encouraged to pay for feature requests

So All May Eat (SAME) Cafe

Non-profit in Denver, CO Pay What You Want Restaurant “Making Healthy Organic Food Available to all” Accept an hour of work for food too Costs

- $2,000 a month for rent- $2,000 for the food- Average meal costs $2

Revenues- Average donation $3.66

http://en.wikipedia.org/wiki/SAME_Cafe

Panera Bread

Chain of bakery-café restaurants in US and Canada

2010 created Panera Cares CEO Ron Shaich based the idea

on SAME Cafe in Denver, Colorado

Dearborn, Michigan; Portland, Oregon; Chicago; and Boston

Each site serves 3500 per week

http://en.wikipedia.org/wiki/Panera_Bread

Overview

Pay What You Want Model Examples

- Radiohead “In Rainbows”- Disconnect.me- Canonical (Ubuntu)- So All May Eat (SAME) Café and Panera Bread- Vimeo Tip Jar