Why I Launched The Pay What You Want Marketing Agency
I recently launched The Pay What You Want Marketing Agency. And it’s raised a few eyebrows from people who know me (and who don’t as well). To say I’m sure it’s a great idea would be an overstatement. It’s an idea that I want to put out there and discover where the road takes me. A bona fide experiment.
It’s (Kind of) Been Done Before.
There’ve been all kinds of Pay What You Want experiments to draw from. Usually, PWYW works best when the marginal cost of a product is very low (or zero). One old friend suggested I call it the In Rainbows Agency. For example, an e-book store, for games, and a Radiohead or Wheatus album.
But it’s been working for products as well. Headsets.com has been very successful with its PWYW marketing campaign. Most customers, surprisingly or not, actually paid the full price. “Although the average price is reduced a bit,” CEO Mike Faith was quoted as saying, “we get more sales per dollar of marketing and therefore a higher overall return.” Everlane ran a PWYW model, though it required, at minimum, you paying the cost of the article. Fair enough.
The Met in NYC runs on a pay what you want model. Though I’ll admit, I don’t think I’ve ever paid the recommended donation (while I’ve happily paid to get into the MoMa many times).
The behavioural economics of PWYW are very interesting. For example, one study looking at how to increase the number of rollercoaster pictures sold (y’know, where you are have your eyes closed and the kid behind you is vomiting), found that a PWYW model alone didn’t change the average spend. However, when the it was promoted as PWYW with half the proceeds going to charity, the average amount paid increased by over 6X!
So there is precedence that a PWYW model can provide advantages both to the customer and business.
The Real Value
The most important challenge to the idea has been the question of devaluing my work. But I think that is the ultimate goal of this experiment. I want to understand how others value my work. Just because a comparable freelancer charges 85$/hour, is that what I should default to? Am I keeping up with the Joneses or building value?
While I know that value of my work will vary greatly depending on the client’s need and perception, I can also in the process gain a varied insight into how my work translates into real value — across a range of client types. What will be the result of the client pricing my work?
My Pay What You Want Model
An important side note is that the same previously mentioned rollercoaster experiment noted that people may be deterred from a PWYW model, as “individuals feel bad when they pay less than the ‘appropriate’ price, causing them to pass on the opportunity to purchase the product altogether”.
Knowing this, I’ve tried to build my model a bit differently:
- After the project is over, you tell/email me the amount I should invoice you, no questions asked.
- The 5 hour maximum means neither of us have much to lose. As an agency veteran, I’ve spent countless hours and resources on pitches. If you decide that I didn’t provide any value on the task, I lost the pitch, and I’m out the (less than) 5 hours.
- Less than 5 hours is not a big time commitment. You probably won’t give me your biggest challenges. That’s the point. I’m looking for a task that can be explained in a paragraph. That means it’s creative, easy to grasp, can bear interesting results, and if it doesn’t…well, it’s not of great consequence.
- I’m also an avid explorer of ideas and searching for the next big one. You might have it and we’ll want to continue working together. That’s perhaps the biggest driver of this project.
- It is at my discretion which projects to choose. Meaning I’ll only accept tasks that I feel will be mutually valuable.
That’s it. This is an experiment. If you are looking to inject some creativity into your company, process or a project, you should see this as a risk free proposition.
Let’s have some fun with it!
Originally published at marketing.joeytanny.com on April 8, 2016.