"Pay what you want" model. Crazy? Revolutionary? Brilliant? No-no?
https://elementary.io/ is a linux distribution. Beyond whether is good or not, it caught my attention they have this: "Pay what you want" price model, here's an explanation on why.
"We use a pay-what-you-want model because it makes it incredibly easy for those who want and are able to fund development to do so, while keeping things accessible for individuals or organizations where the costs might be prohibitive. Our goal is a sustainable open source ecosystem of quality apps that people love."
I think this is great, most of the people would expect a free linux distribution so if anyone contributes they're already making more money.
I know this model is not for every product, but in a world full of free apps, free services (which are not free I know because for the big players YOU are the product) , could this be a model for the indie hackers?
What about a: "Pay what you want starting at $1 USD/month"
I would love to hear your opinions.
#ask-ih #business-model
I'd prefer Pay what you want starting at $1 USD/month so you can have a certain MRR.
Absolutely, and I think (now that I went through the comments) this could be something to start with ("early adopters") and then raise the bar gradually.
Some good arguments have already been made why this is not a good idea for businesses, even probably for Elementary. But I'd also like to add that pricing is extremely important for positioning and branding. Both consumers and businesses judge the quality of a product and compare it to competitors by looking at the price (often involuntarily, of course). That opportunity is completely neglected with this donation based pricing.
I've tried to do a pay-what-you want license model for an open source Python IDE (https://pyzo.org), some years ago. The software had several hundreds (if not more) users at the time. Two people took the effort to make a payment. It was a big flop.
As mentioned in other comments, I think this is very hard to do for digital goods, because your users are anonymous. Only the most devoted users will even think about paying. This is what Patreon plugs into.
I think the word I was looking for is "fans"! If your users are fans, then you might have a chance. If they're just users, better forget it.
Correct, create loyalty.
On a side note wow, I really like the update to the landing page of https://timeturtle.app/
I hope that was changed after some of my suggestions :D
Ha, thanks! I'm quite happy about it myself :D Yes, your suggestion helped a lot! It made me rethink the "how to" part, and I combined it with bringing the colorful screenshot to the top of the page. So thanks again :)
We have a coffee shop down the street that employs a similar model. They make you a good coffee and you pay whatever you want for it. They've been in business for a couple of years and doing great. What I've noticed that people end up paying an average price of coffee anyways, or even pay more. BUT, I think there is a huge psychological difference when you need to take advantage in public vs. sitting behind your computer. I'm curious to know how it will turn out.
Also, keep in mind that your revenue will be unpredictable unless you setup recurrent subscription. Make sure that your payment gateway will support custom price for each recurrent subscription.
haha I've seen this for instance free Yoga classes, you don't want to be that guy that tossed cents when everybody else put $5 or $10.
Maybe some kind of badge that shows how much you paid :P "Sergey gold member" haha nah, I think that would backslash... but now that I think about it (and depending on the product) some sort of levels that you earn depending on how much you use the product (think for instance StackOverflow where you gain rep and badges) and then that would create a sense of belonging, next time you see the payment screen you would think... "Hey, I'm a 100,000+ reputation user and I've been using this for 8 years, I think I can start doing $2 USD now" :D
On the recurrent payments, yes the idea (and that's not something I'm contemplating right now, it's too early for me atm) would be to set it up monthly subscription instead of a one time payment like elementaryos (for that reason I couldn't be $0)
Make a stream of all the donators and highlight all who pay below 10$ :D
haha
Shaming as a service :D
My honest opinion is that this model wouldn't work for indie hackers. It seems like just trying to avoid the drudgery of figuring out what to charge for your product (which nobody really enjoys). But you've got to charge enough that you can support yourself and continued product development. That requires a customer who is willing to pay something. If you think your product is sustainable for your market at $1/mo, then just charge that. But if it's not, don't expect customers to know that and pay more.
So much true.
The other option is to start with a "early adopters" fee where you have your first users for free and/or $1 USD and depending on the market you increase gradually until the market stops buying. Of course to avoid having a backslash you'll keep your early adopter in a free tier, somehow. Just like G Suite did, I still have a free gsuite account with 100 free seats just because I singed when they started. At this moment they charge $6 /month per user.
Yeah, that's definitely an interesting idea. Grandfathering in pricing is something that we did a lot of at one of my startups where we tweaked pricing a ton. The biggest drawback with that is that it becomes a huge pain trying to keep track of who gets what.
For me personally, my next project is only going to have two tiers: free and pro paid annually. I don't want to deal with anything more complicated than that.
Good luck with that. "in a world full of free apps" - well, free apps pretty much take an obligatory payment from you, called "ads constantly popping up". Open source free stuff also pretty much always follow the same pattern: make a product that's complicated and with poor documentation, then sell your consulting services and "managed" services for "obligatory payments" yet again. Or get bought up by Oracle and...
Not much is really free and I'm almost sure "please pay me a coffee or donate what you want" is a sure bet to keep working at your day job. Can you come up with any significant list of successful products doing that? I know that many good youtube channels have patreons but then again, they offer 'extras' for only those who pay, although sometimes it's only "earlier access". I don't know. My current knowledge says "nope, not gonna work" but I'm not a marketing guy and I'm all open (and interested) to hearing what others have to say.
ikr, they seem free just because you are the product. Yes, just curious and something to think about. It might not be for everyone.
I know that some music artists have used the PWYW model to certain amounts of success (Most famously Radiohead's album In Rainbows), and I've also seen museums use the payment model.
In the case of a SaaS business I kinda like the idea of $1 starting rate, but I know part of what makes this model work for things such as museums is the guilt associated with telling someone "no, I don't want to pay today."
Maybe a good idea would be for you not to have "Free" on the payment page, but they can put in $0 in the "Other" field if they really don't want to pay.
That's exactly elementaryos approach, you have to explicitly type 0. For a Saas would be minimum $1
I know this post is old, but if anyone ends up here from search, The Corresponded is closing down on 1 January 2021, saying that the membership payments didn't cover budget. They had a pay what you want per year model, starting at $1 or similar, and their work was amazing.
https://thecorrespondent.com/834/the-correspondent-will-stop-publishing-on-1-january-2021-wed-like-to-thank-our-members-for-their-support/12825252-8c4236ca
I see various problems with this model:
So true. All of your points prove the differentiator has to be the product quality not the price so user are willing to pay for it.
I’m thinking to try this for an app. It’s a consumer app and I picked this because I want it to be available for most people but also reach a sustainable income level. Haven’t launched but I want to test what price people will pick on a landing page soon with a ‘60 day free but you have to pick your price now, min £1 a month’.
I’m interested how it works for others too especially if there’s any consumer app or news outlet doing this sort of thing.
I think it's a brilliant idea if you are targeting individual consumers or very small companies. Maybe think about having a lower level though :)