Implemented for the first time in education!
I had been struggling to decide how to price my products for quite a while. I had a few variables that I had been thinking about:
- What price would make it a feasible business. Afterall, I am here to establish a for-profit business.
- How do the competitors price their products. The challenges here were:
- I did not want to compete on price
- I do believe what I offer has a value that not many others provide, so it becomes difficult to identify the right competitors
- I have always wanted to ensure that affordability should not become a factor in decision making.
I have seen this concept of pay what you want (PWYM) being implemented in cafes and restaurants – SEVA cafe in Ahmedabad, Kunzum cafe in Delhi. I have always found the concept very intriguing.
Though I always had these thoughts at the back of my mind, I had not paid special attention to them of late. Until, that is, I came across an article in my Facebook feed by Justin Ferriman – founder of Learndash, the learning management system I have used to build my system on. In the article, Justin talks exactly about what I wanted to achieve with my products. Talk about right place right time. All that was left was to figure out the technical side. That took merely a couple of hours. I was set. Well, not quite.
I discussed the idea with my wife, and she just could not fathom me doing this. “Why would you give away all you have worked towards for free?” was the question that bolted out. I had to convince her that I am not giving away anything for free. I am just letting the customers decide the price.
Pay what you want is not the same as free.
And her retort: “You do know if you let the customers decide, they will all pay nothing?” Customers paying nothing, is certainly a concern. I am in this for the long-haul, and to run a sustainable, profitable venture. Am I giving away the farm and not charging anything in return? On doing more research online, I found various businesses where pay what you want had actually been a sustainable model (I did not find any example in education, mind you). Apparently, Radiohead had released an album in 2007 under PWYM. I found a complete artcile on wikipedia with a long list of business that use PWYM. Tom Morkes in an article actually claims how pay what you want lead to more profit than fixed pricing. My interest was piqued, and I was also starting to wear my wife down.
Her next question I actually have found the most difficult to tackle. To tell the truth, I am still unsure how this will pan out. However, I am hoping things will work out. She asked: “What if your prospective customers associate the value with the pricing, and conclude that the products themselves are worthless/ low value?” A logical point, many-a-times we associate value with price. And here I am advocating doing the reverse. My hope is that as we grow, as more people start using our portal, and enrolling in our courses, there would be positive feedback, and people will actually join the courses because they see that the courses are actually helping them improve, and not simply because they can pay what they want. I have also made sure, I leave a few modules for free, so you can get a feel of what you are getting into before you make a purchase.
My thought process behind implementing pay what you want for our courses
As this model started taking shape, I wanted to ensure we do not enroll non-serious/ spammy/ trolling students into courses. So, I decided to put a minimum price. Of course, this runs a risk of most people paying just the minimum amount. And that is fine. I did not want the enrolling price to be 0. So, I decided to set it at a very low quantum – this way I create a small barrier and ensure only serious students join the courses. And I have kept the price quite low to ensure that customers do not confuse that minimum entry price with my costs/ minimum viable price.
I am still figuring this out as we go along. I have decided to convert all my prices into PWYW. Even the services that I offer. This way the message will not get diluted. I will have a minimum price for the courses, and also a suggested price. I will, of course, make sure that the value delivered is not dependent on the price paid. Else the model will not work.
To start with, I’ll do this as a test run for a limited time. Depending on the response, I might revisit this in the future. Hope I will not need to.
I am quite excited. Let me know what you think about this pricing, and if you’d like us to introduce some other specific course under this pricing. We’d love to hear from you.
As of now, we have the following offerings. They all follow PWYM.