Monday, June 23, 2014

Interview: FairPay -- Making Pay-What-You-Want Profitable and Sustainable for the Mainstream

Tom Morkes, author of "The Complete Guide to Pay What You Want Pricing," interviewed me about FairPay, as a bonus for readers of his excellent how-to guide.  FairPay draws on the increasingly popular PWYW pricing model and makes it "ready for prime time." FairPay builds on key aspects of PWYW in a way that can be highly profitable for mainstream businesses, not just a fringe strategy for Long Tail content or special promotions. The audio of the interview was recently make available for download separately, as well. Both are available from Tom (on a PWYW basis, of course!) at the links here:
Tom's e-book and related bonuses offer a rich and useful guide to using PWYW, and are full of insights and experience on best practices for making it work.  PWYW draws on subtleties in human behavior -- it can be very powerful, but there is nuance to framing such offers, and making it profitable on a sustained basis is often difficult.

My interview focuses on FairPay, and how it builds on the core benefits of PWYW, and goes far beyond conventional approaches, to make it more sustainable and profitable, and scalable to large businesses.  Most uses of basic PWYW are for limited promotions. FairPay adapts it to be more predictable and workable for ongoing use -- whether on small scale, or for seller who aggregate items or offer ongoing subscriptions, even to the scale of Amazon or the iTunes Store.

Using Tom's PWYW Checklist as a nice starting point, I clarify how FaiPay adds a process that builds an ongoing relationship based on dialogs about value. Tom lists 11 steps to making a PWYW offer work.  I group Tom's list as follows, and add one more:

#1-4 are prerequisites to using these methods, both PWYW and FairPay:

1.  Identify a Competitive Marketplace
2.  Identify and Target a Demographic with Fair-Minded Customers
3.  Determine a Product with Low Marginal Cost
4.  Create a Product that can be Sold Credibly at a Wide Range of Prices
 
...And #5-11 enhance the process of using these methods, also relevant to PWYW and FairPay:
 
5.  Establish a Strong Relationship with Your Customer
6.  Clarify the Offer
7.  Show the Customer You’re Human*
8.  Appeal to Idealism
9.  Anchor the Price
10. Steer the Customer to the Right Choice
11. Remind Your Audience to Contribute

...To which, FairPay adds a new 12th step, to make it an ongoing, adaptive, individualized process:

12. Repeat offers contingent on fairness -- build continuing relationship and dialog

Doing that involves a number of component steps, as described in the interview and elsewhere on this blog.  (An earlier post provides some diagrams that may be helpful while listening.)  The interview also expands on the rationale for how FairPay applies to various business contexts, and the behavioral economics that show how it can be effective.

I hope you will enjoy this material, and will want to use FairPay to take your business to the next level.  Comments are welcome, and I offer free consulting to those with a serious interest in considering FairPay.

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[*Added note:  Even large corporations can emphasize their human values and the people behind them.]

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