Pay What You Want pricing methods have become popular in the online marketplace. How do businesses make money when letting customers choose their price? How do you set up Pay What You Can pricing in an online store? SamCart’s e-commerce experts are here with the answers to all of your Pay What You Want questions.
What is Pay What You Want Pricing?
Pay What You Want (PWYW) is a pricing structure that lets buyers contribute an amount they choose in exchange for a product or service. This model is also commonly called donation-based pricing and Pay What You Can pricing. You might be wondering, “Why would I let customers choose their price?”
While it might seem unconventional, this approach can have a variety of positive impacts on your business (and your bottom line). Let’s take a closer look at some benefits of Pay What You Want pricing.
1) Roping Customers In | The Perfect Marketing and Introductory Offer
Pay What You Want pricing is best known as a marketing strategy. You give customers a taste of your products at a rate you know they can’t refuse (because they picked it themselves). After getting a taste of your incredible products first-hand, you can have new customers hooked for life. The PWYW pricing method achieves the same results as a free trial while offering additional perks for online sellers.
Unlike a free trial, a Pay What You Want offer will bring customers in while still bringing in some cash for you. Additionally, PWYW pricing will weed out “freebie seekers” who are completely unwilling to pay—bringing forward only the best customers interested in your products.
2) Giving Back with Your Online Business
Conversely, businesses also use Pay What You Can pricing as a way to give back—making their products or services more accessible and less burdensome to individuals in any financial state. Giving back can have several positive impacts on your business, including:
- Connecting with the community
- Building brand loyalty
- Doing good—plain and simple!
3) An Ideal Fundraising Sales Method
Pay What You Want pricing offers an alternative to fundraising platforms with high transaction fees. At the time of publication, GoFundMe (a popular fundraising outlet) charges 2.9% + $0.30 per contribution. The more money you raise, the more you have to fork over to the crowdfunding host site. Pay What You Can pricing can help you avoid this fee on your campaign’s success.
Additionally, this method makes it easy to offer contributors something in return for their donations. For example, let’s say you are an artist fundraising for a charitable project. You can raise money by creating a PWYW listing for a digital art print. In return for their donation, contributors will automatically receive the digital download, further incentivizing your campaign and offering you additional exposure.
4) Boosting Digital Product Sales
Digital products are an ideal form of passive income. A single item can earn you unlimited sales without requiring any additional work from you. However, if you find your digital product sales dropping, you might consider Pay What You Want pricing.
Switching up your pricing method can rejuvenate your sales and bring in new customers. If a lower, discretional price leads to a higher volume of sales, you can make more money without putting in any extra effort. In these cases, PWYW pricing can even generate more income than fixed pricing.
5) Understanding Your Market
When entering the online marketplace, one of the greatest challenges some creators face is pricing. Naturally, you do not want to leave money on the table by undercharging for your products. On the other hand, you do not want to limit your sales by charging more than buyers are willing or able to pay.
If you find yourself wondering, “How much should I charge for my products?” PWYW pricing can help. Some online sellers use Pay What You Want pricing to better understand their market and customers. Once you have an idea of what your ideal price point is, you can relist your item with a firm price tag.
6) Avoiding Undervaluation
Your artwork and handmade items are, in some ways, priceless. However, creators are often pressured to list items at a low price point—making it easy to undervalue their work in the online marketplace.
When you launch Pay What You Want pricing, you can open up the ceiling on the value of your items. You might be surprised to see how many customers know your worth. Buyers might even regularly contribute more than you would have charged had you put a price tag on your items. You can also ensure your items are properly valued by setting a minimum PWYW price.
7) Clearing Out Extra Low-Cost Inventory
Have you ever had so much extra inventory that it begins overrunning your workspace? You can clear out old inventory quickly while still making money with Pay What You Want pricing. This method is similar to placing closeout items on sale—though you might find PWYW pricing especially intriguing for potential customers.
Setting Up Pay What You Want Pricing
SamCart makes it simple to launch Pay What You Want pricing in your online store. When launching a new item, select “Pay What You Want” in the pricing type drop-down menu. Your selection will generate the Minimum Contribution box. Enter in the minimum amount you will accept for your product. If you do not want to require any minimum payment, you can set this value to $0.
You can choose to further customize your listing by adding a suggested price, configuring a recurring payment option, and more. Once you have the product all set, you can launch your item and begin bringing in sales almost immediately. It is just that simple! You can find our step-by-step PWYW support guide here.
Pay What You Can Pricing: How Do You Make Money?
For small businesses, Pay What You Can pricing might sound like highway robbery waiting to happen. However, advanced online selling platforms like SamCart offer a safeguard to ensure your business still makes a profit: minimum suggested contributions. As the name suggests, this feature sets a minimum amount that customers can pay to get your product or service.
You can also include a suggested price, which gives customers a look at the estimated value of your products. This feature can nudge customers to be more generous with their contributions—or help customers at your minimum price range understand the value and generosity of your offer.
Set Up Pay What You Can Pricing With SamCart
If you are an online seller interested in Pay What You Want pricing, SamCart is here for you. Our e-commerce platform supports a variety of payment methods, pricing structures, and product types—including digital products, physical products, online classes, subscriptions, memberships, and more. We invite you to give SamCart a try with a free trial, or schedule a demo to learn more today!