"Perceived Value?"

Hi Rooster,

Thanks, an amazing post! Thank you for sharing your experiences....

I know about two examples of "pay what you think it's worth" - but both are "offline" examples. Both are restaurants.

The first example is a restaurant here in my city - Melbourne, Australia. It's a vegetarian restaurant - I first heard about it from one of my brothers, who's vegetarian.

It's just a small restaurant, but nowadays, whenever I pass by it, it's always packed full, it seems no matter what the time of day. When you go there, the "menu" is written up (in big letters) on the wall, and there are no prices listed.

After your meal, when you go to pay, and ask "how much do I owe you?" the staff member simply replies with "Whatever you feel like". And they mean that literally - you pay whatever you feel like you want to pay!

(The restaurant is called "Lentil As Anything".)

The second example is one I read about once. It's about a restaurant which was operating, I think in the 1970s or so. It was a normal restaurant, where also, you simply paid what you felt your meal was worth. From what I've read, this restaurant was always full too, and got a lot of business. And here's the surprising part....

In this restaurant, the owner found that people often "overpaid". That is, most people chose to pay MORE than they otherwise would for their meal. And they loved it too.

So, it seems in some situations, the "pay what you feel it was worth" business model is a successful business model. I think what Marcia Yudkin said is true though - one of the keys is that the customer is not "anonymous".

Remember Stephen King experimented with a system, where you paid a "donation" to read a chapter of his next book. His experiment failed, though - many people just wanted it for free, and didn't pay anything. I think the problem in his experiment was that people could download anonymously. If you had to identify yourself to download it, then perhaps his experiment may have turned out differently....

Fascinating topic, though. Thanks Rooster (and everyone else)!

- Dien Rice