Doing Well by Doing Good with FairPay -- Shared Social Responsibility and Pricing

Adding charitable giving to the pricing process can significantly increase total revenue and profit. This was the finding of a paper in the July 16 issue of Science that was reported recently on the Discover magazine blog. The finding was for charity combined with Pay What You Want pricing (PWYW), but the lesson seems equally applicable to charity combined with FairPay. FairPay builds on PWYW by adding feedback on buyer pricing that lets sellers decide whether to make further FairPay offers, as explained in the sidebar to the right.

As reported, PWYW+charity yielded significantly higher total profit than PWYW without charity, and also more than either a simple set-price, or set-price+charity.

Individually, the PWYW buyers paid less than the set-price buyers, but far more of them made a purchase. In this case the product was a photo of the participant taken during an amusement park ride. Purchase rates were very low with standard pricing (at $12.95) and only slightly higher when 50% of that price went to charity.

As summarized in the Discover blog, "...But when customers could pay what they wanted in the knowledge that half of that would go to charity, sales and profits went through the roof. Around 4.5% of the customers asked for a photo (up 9 times from the standard price plan), and on average, each one paid $5.33 for the privilege. Even after taking away the charitable donations, that still left Gneezy with a decent profit."

"This is a substantial result, especially since it came from a real setting. The theme park that Gneezy used stands to make another $600,000 a year in profits if it takes up her sales strategy. And just to be sure, Gneezy confirmed that sales at a nearby souvenir shop didn’t fall on the days when she ran her study. These extra profits weren’t coming at a cost to retailers elsewhere in the park."

These results suggest that combining FairPay with charity could have even better results, possibly even with much lower levels of charity, and thus higher profit. The charity component encourages people to buy and to pay a fair price, and the FairPay feedback process provides even more incentive to pay a fair price. I suggest that FairPay without charity will also prove very effective, and be more widely applicable, but the combination certainly seems worth trying.

Gneezy describes this use of charity as "shared social responsibility," a variation on "corporate social responsibility," which gets to issues of how corporations seek to build a more collaborative relationship with customers. I suggest that the FairPay pricing process is a complementary way to build more collaborative relationships, and to do so more directly and efficiently. Whether the combination is more or less effective than FairPay alone, remains to be seen, and probably depends on the details of the situation.

The charity contribution percentage could be fixed as it was in this experiment, or it might be at a user-specified rate. One real-world example of a PWYW offer with a buyer-specified rate of charity is from Camel Audio (until the end of August 2010). The suggested price is $59 (which seems to be the usual list price), and the suggested charity contribution is 50%. My test indicates this Web offer restricts payments to being between $1 and $100, but that it allows charity rates up to 100%.

The results of the Gneezy paper also show how much of the addressible market can be lost under conventional pricing. Sixteen times more people bought photos when given the ability to pay what they wanted (but they paid poorly), so that is not so attractive. But nine times more people bought with PWYW+charity -- and they paid at a rate that tripled profits!

Trying new pricing models takes time, effort, and some risk, but it would seem that the payoffs might be very large indeed. Businesses struggling with revenue models might be risking much more by not taking the plunge.

Indie Games Generate $ Millions with Pay What You Want

For those that think there is no real money in Pay What You Want (PWYW) pricing, the growing success of the Humble Indie Bundle suggests otherwise. Their first four promotions have raised over $6.1MM,** with the last one just ending at $2.2MM [now much more**].  It has been reported that the venture behind these offers has raised $4.7MM in VC funding [now more**]. Their model includes payments to the game developers, the distributor, and charities including EFF.*

EFF has posted a nice summary, observing that "While the record labels, movie studios, and video game producers have not figured out a way to compete with free, others have...as the Humble Bundle has shown us, it is possible, with creators and distributors finding new and exciting ways to compete with free. ... when done right – developers, content providers, and even those who provide the business model can successfully compete with free." Additional details are in a Wikipedia entry.

All of this adds to my suggestion that FairPay (which augments PWYW with feedback processes that incentivise buyers to be fair to sellers, as described on the sidebar) can take this from a promotional tool to a mainstream business model for ongoing use.  Indie games and music are a great place to start, since that Long Tail content is where basic PWYW selling is already gaining traction.***

My previous post, How Indies Can Disrupt the Disruptor - A Disruptive Revenue Model for Music and Games, addresses this in more detail -- suggesting how indie distributors can take on iTunes to change the game, starting with the Long Tail, and moving toward the mainstream.

(*The charitable element is also a notable factor in the Humble Indie Bundle, at two levels. One is true charity, in the form of EFF and others. The other is a charity-like feature, in that the structure of the Humble Bundle revenue is for lightweight (and buyer controllable) contributions to the distributor, such that the significant share to the game creator ("developer"), analogous to the artist, musician, etc., provides a social-benefit motivation to pay -- rewarding the creator, and enabling further creation.  See other charity-related posts.)

Updates:-------------

**[9/21/14:  Wikipedia on Humble Indie Bundle reports this as a total of $30MM, in addition to $20 million to charity, as of 8/23/13.  CrunchBase reports funding of $9.2 million. Check there for further updates.] 

***[1/17/12:  For general insight into real uses and experiments see "Pay What You Want -- Still Crazy After All These Years?," and Wikipedia on PWYW.]

Pierre Omidyar: Adventures in New Business Models for Journalism ...and FairPay

As a follow up to my post on Jeff Bezos and The Washington Post, I turn to another exciting entry into journalism by a top-tier e-commerce innovator with very deep pockets, and how the new FairPay business model can work for that adventure as well.

Pierre Omidyar, billionaire founder of eBay, also considered buying The Washington Post, but revealed in his blog that he decided instead to actively participate in developing an entirely new media platform intended to support and empower independent journalists. 

Such a platform is especially well suited to the use of the FairPay architecture, with its ability to engage readers to partner with journalists, by serving as patrons for work that they value.  My earlier post on Bezos and The Post outlines the fundamentals of how FairPay addresses this business challenge.  This post builds on that.

***Second in a series on tech billionaires (Bezos and Omidyar) reinventing the business model for journalism, not as their personal charity, but by creating a new kind of reader/patron empowered by e-commerce technologies.***

In tune with Bezos, Omidyar points to the primacy of customer relationships in e-commerce  (in his interview by David Carr):

Technologists understand our users and break down how user engagement increases from somebody that maybe just tries your product once and then goes away, to a different kind of person that progressively gets more and more engaged and then becomes just totally locked into your product. That’s something people in Silicon Valley spend a ton of time analyzing, working on and thinking about.

FairPay integrates this kind of engagement directly into the value exchange process (as described in my Bezos post). Here I highlight additional aspects of Omidyar's focus on "elevating and supporting" individual journalists, and how FairPay supports that.

Omidyar says (to Jay Rosen) he wants to run his venture as "a company, not a charity." That means generating a revenue stream (presumably from readers, not advertisers). Rosen describes this as "the personal franchise model." The ability to engage readers to serve as patrons is essential to that. 

FairPay naturally integrates the reader's evaluation of a journalist's value directly into the pricing process.  It engages the reader in ongoing "dialogs about value" on how the reader values the work of each journalist over the course of their relationship.  Readers intuitively recognize many dimensions of value, and the dialog can easily be structured to elicit pricing that factors in this judgment with regard to such dimensions as quality, style, investigation, reader value, and social value .

With FairPay, an Omidyar media platform can get direct feedback from each reader on the perceived value of each article, the body of work by that journalist, and the media service as a whole. 

• This can be directly linked to compensation for each journalist, thus increasing engagement and the quality of the relationship on both sides. 
• Readers will know that a significant portion of their payments go to the journalists, and that their feedback bears directly on how journalists are paid (and what investigations are funded).  
• Conversely, journalists will be motivated to create a body of work that readers recognize as valuable by voting for them with their wallets. 

This gets to the issue of "Creating Shared Value," as described in the influential 2011 HBR article by Porter and Kramer, which suggests the need to "reinvent capitalism" with broader ideas about value creation that will "unleash a wave of innovation and growth." They propose that "creating shared value represents a broader conception of Adam Smith's invisible hand." Another of my earlier posts  shows how FairPay operationalizes that idea to reflect judgments of shared social value directly into pricing dialogs, creating that broader conception of the invisible hand.

FairPay is uniquely focused on creating the multidimensional dialogs on value that are needed to turn readers into patrons of important journalism. It not only supports the journalistic effort, but guides it to the tasks that the reader/patrons consider important. 

• It builds a deep relationship with readers that can feed directly into the key editorial processes that determine which journalists to support, in what investigations, and how they are paid. 
• It builds a value discovery engine into the heart of the media platform, to drive it toward work that is good and important, and to get readers engaged as patrons who pay for that, both for themselves and for the common good.

And given a model in which (as Rosen reports) "all proceeds...will be reinvested in journalism," readers can be strongly motivated to be generous patrons. Omidyar is quoted as saying he started eBay on the premise that "people are basically good." Modern behavioral economics demonstrates that his faith is well founded. FairPay offers a way to apply that virtue to support a wide range of valued services, including support of quality journalism.  In doing that, it leads to the answer to Jeff Bezos's central question: "Why should I pay you" (see previous post).

"Why should I pay you?" - Bezos' Washington Post - Mapping a New Business Model for Journalism

Jeff Bezos' central question about The Washington Post, is stated in his recent interview: "Why should I pay you for all that journalistic effort when I can get it for free?”

I suggest a process that can generate the answer.

***First in a series on tech billionaires (Bezos and Omidyar) reinventing the business model for journalism, not as their personal charity, but by creating a new kind of reader/patron empowered by e-commerce technologies.***

In his letter to Post employees, Bezos said "There is no map" -- but I suggest this process provides a map -- it may be crude and in need of some correction, like early maps of "The New World" but, like them, it is good enough to start a journey in the right direction, even if that journey may take some unexpected turns.

As Bezos encapsulated it in his interview:

The Post is famous for its investigative journalism. It pours energy and investment and sweat and dollars into uncovering important stories. And then a bunch of Web sites summarize that [work] in about four minutes and readers can access that news for free. One question is, how do you make a living in that kind of environment? If you can’t, it’s difficult to put the right resources behind it. . . . Even behind a paywall [digital subscription], Web sites can summarize your work and make it available for free. From a reader point of view, the reader has to ask, "Why should I pay you for all that journalistic effort when I can get it for 'free' from another site?"

"Why should I pay you?" is the central dilemma of Internet content, and exactly the question the FairPay process is designed to answer. There is no one simple answer, but I suggest the general shape of the answer is this:

• We ask you to pay only what you think fair for the value we provide you -- isn't that fair? The quality journalism we provide is expensive to produce, and if people like you who value it do not pay a fair price, how can we continue to provide it?
• We will treat you as an individual patron -- we will listen carefully to what you want, and you will get our best efforts to produce and deliver it to you.

There is no one simple answer -- but FairPay offers a reasonably simple process for seeking the answer in all its complexity, by fully applying the one-to-one power of the Internet:

• The answer is an individual one.  It will vary from person to person, from day to day.
• Finding that answer requires an ongoing, individualized process.
• It also requires individualized pricing, a concept that is challenging as well.

This is a problem that was made difficult by the Internet, as Bezos observes, but it is also a problem that can now be solved using methods enabled by the Internet. 

So "Why should I pay?" -- The essence of this FairPay process is to undertake deep, computer-assisted dialogs with the reader on just that question: 

• The answer must be individualized to pin down what value The Post actually delivers to me.
• It must structure a dialog to learn what I think The Post is worth to me -- and to help frame my evaluation to fully appreciate the value I receive.
• It must close the loop to drive toward a fair exchange between me and The Post over time.
• The first cycles of this dialog may give poor results, but with good feedback and direction, this can drive an emergent process that delivers value, sets prices for that value, and converges toward a fair value exchange.

Bezos emphasizes that there is a need for experimentation and patience -- FairPay offers a structured process for ongoing experimentation that can be expected to move toward convergence, and to provide data to shed light on any rough spots so the process can be altered to work even better. Think of it as an adaptive value discovery engine:

FairPay centers on the idea of customers as patrons who have only to be motivated.  It provides a mechanism for them to be patrons of journalism.  (It works similarly for patrons of books, music, video, apps, and other digital offerings.)

The essence of FairPay is in the workings of this engine:

• to view transactions not as ends in themselves, but as steps in a process that builds a relationship based on fair value exchange
• to let you learn and adapt, to provide what your patrons value
• to let the patrons learn pay according to the value they perceive, and to be fair about that
• to guide these dynamics, to motivate both the patrons to pay a fair price, and your efforts to seek to delight them

FairPay draws on three main enablers:

• Modern behavioral economics that shows that people are not heartless profit maximizers, but can be motivated by a sense of fairness and related aspects of reciprocity, altruism, and self-image to pay more than they have to (share their "value surplus"), when given a good reason.  Supporting the quality journalism of The Post, for my own benefit, for the common good, and out of fairness, is just such a reason -- if given in terms that are specifically relevant to me and responsive to my concerns. Think of me as a patron, and make me want to be a patron.
• Computer-assisted dialog, and the growing ease of use and power of such dialogs to inform the process of understanding what I value, and to help me to recognize what value I have received. Engage me as a patron and show that you understand what I care about.
• Predictive analytics that can help The Post to shape both the service it offers me and the dialog it has with me in a way that gives me what I really care about, and makes me want to pay a fair price for it. I will be a patron if I feel what I patronize is worthwhile and respects my desires.

How much should I pay? FairPay treats that as a matter for dialog.  Only I can determine what I value, and what price I think fair for it.  FairPay lets me pay what I think fair. ...But it does not stop there.

Why should I pay fairly? FairPay enables The Post to suggest what I should pay, track what I do pay, understand why I think my price is fair, and tell me whether they agree it is fair. All of this is specific to what I read, how often, how much, for how long; whether I read it for business or pleasure; how affluent I am; and many other details. The Post can measure and report that to me, consider what I say about the value I perceive, and factor that into their suggested price. They can tell me they think I am being unfair, and limit what they offer me, or they can tell me that I am being generous and enrich what they offer me. If The Post plays this game well (mostly carrot, a little bit of stick), they can give me what I value, and motivate me to pay a fair price for it.

These enablers and this value discovery engine inform a new invisible hand, one that can entice readers to happily pay a fair price for the content they consume. It gives the reader the power to set a price they are comfortable with, but gives the publisher the power to nudge that to a level the publisher is also comfortable with over time (or to cut back on what is offered).

That new dynamic balances my goals and The Post's. The Post can gamble on my fairness for a time, to see if am willing to be a patron. (Doing so costs them almost nothing.) If not, it can leave me to deal with a conventional paywall subscription, or to fend for myself. If I am willing to be a patron, The Post can serve me at whatever level I justify that I pay fairly for.

I suggest this fits perfectly with the guidelines Bezos outlined in his letter to Post employees:

"We will need to invent..."
...this map is both an invention and a framework for continuing invention

 

   "...which means we will need to experiment"
...FairPay is a method for experimentation in the form of structured dialog with readers, for dynamically learning what they value, at what price, and for guiding the Post's adaptation to provide it.

 

    "Our touchstone will be readers, understanding what they care about .... and working backwards from there"  

...that is the touchstone of FairPay, turning the invisible hand to drive just that, in a new kind of emergent pricing process.  

(More details are provided in the sidebar, other posts on this blog, and on the FairPay Web site.)

***First in a series on tech billionaires (Bezos and Omidyar) reinventing the business model for journalism, not as their personal charity, but by creating a new kind of reader/patron empowered by e-commerce technologies.***

Pay What You Want -- Still Crazy After All These Years?

Pay What You Want (PWYW) pricing has gotten some attention in the past few years, but most people still view it as naively idealistic, only suited to very special situations. However, a growing body of research and actual usage is suggesting that it has much more potential value than most businesses realize, in a wide range of situations very different from that of Radiohead or a museum.

The Freakonomics Blog has paid some attention to this, and the greatest publicity for PWYW since Radiohead has come from the special PWYW preview offer for the Freakonomics movie.

PWYW is of particular interest to me because the FairPay pricing process described on this blog is a radical enhancement of PWYW that adds tracking and consequences to encourage buyers to pay fairly over an extended series of transactions. This encourages what might more accurately be called Pay What You Think Fair, to produce much better revenue and profitability. As described elsewhere on this blog and the companion Web site, this model offers many of the advantages of Freemium models, but in a more powerful, individualized, and dynamically adaptable form.
...But the point of this post is that plain vanilla PWYW, alone, is highly underrated.

To help make that point, and to encourage research into PWYW, FairPay, and other innovative pricing models, I have posted a Resource Guide to Pricing - Annotated links and references as a survey of this emerging body of exciting research.

I suggest that a whole new era in pricing models is just beginning, spurred by the capabilities of the Internet. A nice summary of some of these directions is in the book "Smart Pricing" by Raju and Zhang of the Wharton School, which has illuminating chapters on PWYW and many other innovative models. Two other notable books on pricing are also listed.

More specific to PWYW are some eight research papers published in the last two years, all of which find it to be quite effective in a range of situations, explaining a number of reasons why people actually chose to pay, and to pay reasonably well, even when they do not have to. One (the Gneezy paper) also looks at PWYW combined with a share of proceeds to charity, which was found to be particularly effective (and subject of an article on the Discover Magazine blog). Another (the Regner paper) focuses on a very interesting online indie music distributor with a PWYW model (combining a try-before-you-buy feature and a high revenue share with artists, both seen as enhancing payment levels).

While many of these papers are theoretical and written for academics, I suggest that business people would do well to give them a look (skipping over the heavy parts, and with just reasonable caution that many of these models and experiments are simplified).

I welcome feedback on this resource guide, and suggestions for additions -- it is a work in progress.

Also sought are researchers interested in doing studies of Fairpay.

Note to searchers: PWYW is also known as Pay As You Want (PAYW), Pay What You Wish, Pay What You Like (PWYL), Pay As You Wish, Pay As You Like (PAYL).

(Revised 10/6/10)
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[8/29/11 update:  The Wikipedia article on PWYW also has useful information, including links to articles on some notable real uses of PWYW.]

A Better Revenue Strategy for Non-Profits in the Digital Era

FairPay is a revolutionary new logic for revenue relationships in our increasingly digital world -- it was designed to make for-profit digital business more effective, but also promises to dramatically enhance revenue generation for non-profits. 

The Internet has given new power to consumers. FairPay accepts that power and works with it to shift relationships from a short-term, zero-sum focus -- one that no longer works effectively for anyone -- to an ongoing win-win focus that seeks to maximize the co-creation of value over a relationship. It creates a new focus on the fairness of pricing and value propositions on an individual basis -- an "invisible handshake." This FairPay handshake is particularly relevant to non-profit services. What better sector to benefit from the fairness and cooperation that FairPay elicits? 

A museum example

I joined the Whitney Museum not long ago, and was offered a complex menu of membership levels and optional features:

• There was the usual set of levels based on number of people and features to be included, with a set price for each.  This made it easy for me to pick a level, but offered only a crude basis for the museum to seek more share of wallet.
• There was also a "Curate Your Own Membership" program that let me choose from five series of premium features -- with any one included, and added ones offered for $40 each.  The five series were billed as Social, Learning, Insider, Family, and Philanthropy, with a short phrase explaining the apparently non-overlapping set of features in each. That was a nice touch, adding some of the spirit of FairPay, in that it was meant to enable me to better customize my value proposition. The problem was that they made me an offer I couldn't understand. Not having been to any of their events, and not knowing the exact topics, how could I know which I would want? I doubted I wanted enough to buy extras, so just picked one that sounded OK. Great willingness to customize the value proposition, but not very effective at it.

The core problems: unpredictable value, and need to set prices in advance, in ways that cannot be expected to match well to value.

Before looking at other examples, let's dig a bit deeper on the issues here. The problem is there is no real dialog about value, so no real optimization of the value proposition. I have been to the museum several times since joining, and have had no real interaction with the organization. They must know my attendance record, and that I have gone to none of their special events, but I have no hint of that. If they want a bigger share of my wallet, they are not targeting me well at all.

With FairPay, the membership price could be set based on usage, with 20-20 hindsight (maybe every three or six months) -- after I use whatever services I please, and get a usage report that reminds me what I used (exhibit visits, extras from any of the five event series) along with an itemized suggested price from the museum, tailored to what I used and what is known about me (maybe visits were 30 minutes or five hours; some at peak times or not, some to sold-out events, student/artist/senior, etc.). 

The museum could instead offer "post-bundling," a way to create ad-hoc packages of services on demand, at prices that build in personalized volume discounts. That could encourage me to try more services, and to pay more, to the extent that I found them valuable. Even with just a simple form of this kind of "post-pricing," the extras from all five series at the Whitney might be offered to me at per-event prices, but with volume discounts based on number of events attended in a given pricing cycle. That way I need not guess in advance what I might like, and would take no risk of being wrong, (There could even be "roll-over" provisions to smooth over the arbitrary period boundaries, just like "roll-over minutes" on cellular services).

A win-win customer journey with a loyalty loop centered on value

Such post-pricing is an important foundation of FairPay, which adds other key features to generate rich customer journeys that center on win-win value. Modern marketing has come to realize that the key to success is not in individual transactions, but in maximizing return business. Transactions roll into customer journeys, and creating "loyalty loops" in those journeys brings the return business that maximizes Lifetime Customer Value (LCV). FairPay drives those loyalty loops to center on value, to fuel deeper and more effective relationships.

FairPay does this by combining post-pricing with a new supercharged variant of Pay What You Want (PWYW) pricing. Non-profits often apply PWYW principles to donations, but in the digital age, even profit businesses are finding PWYW can sometimes be surprisingly effective. FairPay adds a new balance of powers to make this more reliably effective. The new balancing factor is that the consumer pays what they think fair, knowing that the organization will track that, and make or withhold future offers depending on how fair the price seems to them, based on full consideration of the particular situation. 

Continuing our museum example, with full use of FairPay, the price schedule would just be suggestive (the PWYW aspect). The museum could highlight the value I actually got, based on actual usage data and report that with its suggested price. If I were a regular who came to value the programs, that would be evident to both me and the museum from the usage data, so we could converge on a fair price for what I used. If I went often, the price should be higher. If I ended up just going occasionally, we could settle on lower prices, but still keep me as a supportive patron with a sense of belonging and patronship, at whatever level seemed appropriate. That would still make me more likely to visit than a single-shot set-price pay-as-you-go alternative, and thus more likely to pay something, and more likely to consider a more generous level of payment/donation. Of course at first my price setting might be unduly high or low, but the museum could nudge me toward a good understanding of value and fairness by adjusting the level of perks in its offers (or terminating the privilege of FairPay membership, requiring me to adhere to a conventional price schedule).

(A very similar example of how this can work is described in my post on FairPay pricing for premium tiers for the NY Times -- journalism has much similarity to non-profit cultural enterprises.  Another post takes a broader look at the issues for journalism that are also very relevant to non-profits.)

[Update 1/24/18: A further example explores how FairPay can make the Metropolitan Museum's Pay As You Wish pricing policy more fair for both patrons and the museum.]

For a full introduction to FairPay see the Overview and the sidebar on How FairPay Works (just to the right, if reading this at FairPayZone.com). There is also a guide to More Details (including links to a video).

The big picture -- How "customers" make non-profits sustainably win-win

Consider the spectrum of non-profits, from more service oriented to more charity oriented:

·         Co-operatives that operate much like a business, but with all profits shared by the members.

·         Professional organizations that may offer publications, conferences, certifications, and other benefits

·         Cultural organizations such as museums that may offer exhibits, facilities, and events.

·         Secular or religious organizations that may cover a wide spectrum of direct services like food, housing, schools, hospitals, and museums, and have a wide mix of direct customer recipients and indirect customer benefactors.

"Customers" are central across this spectrum, but with variations in expectations of how pricing applies:

·         In traditional for-profit business exchange, customers are generally expected to pay enough to sustain the enterprise. (But even here, there are social values, such as in the business of journalism, and more generally in various "social" and "environmental" bottom lines, and in "benefit corporations.")

·         In non-profits that deliver services for fees, direct customers are expected to pay for services, but often with the help of subsidies from benefactors (indirect customers) who give donations to make those services more affordable.

·         In pure charities, direct customers may not be expected to pay at all, and benefactors are needed to donate enough to sustain that.

FairPay provides new and better way to address the complex issues of pricing and sustainability across this spectrum.  Consider how this works for the two different (but often overlapping) kinds of customers:

·         Recipients -- direct customers of direct services (the mission). Here, pricing takes on two interrelated dimensions -- what is the fair value of the service, and what is the fair contribution from the recipient (to both the cost of the service, and to the added overheads needed to sustain the organization).

·         Benefactors -- indirect customers of indirect services (the altruistic value of supporting services to others, and the value of being a benefactor, including perks and recognition).  Here, the key dimensions are the value of services to others enabled by the benefactor’s donations, and the value of indirect benefits to the benefactor.

The details will vary with the type of customer and the nature of the organization and mission, but the essential task is the same -- to generate sustaining revenue by setting prices that make the value proposition be "win-win."

Of course these factors are difficult to quantify in any precise and objective way, but the beauty of FairPay is that it puts value into personal terms, with all of the nuance of human evaluation. Value setting need not be precise, as long as it is done through flexible and open dialog.

·         Organizations can frame the value they think they provide in terms of whatever metrics are available (and the metrics are becoming increasingly meaningful)

·         Customers (direct or indirect) can respond by factoring in whatever aspects of value they think important, including their perceptions of what is reported to them, plus any positive or negative factors they think important, including ability and willingness to pay. Multiple choice options (with some interpretation of free-text comments) can enable this to be automatically scored and factored into assessments of whether customer-set prices are fair.

·         The organization can offer "carrots" to encourage generosity, and gently withhold privileges or perks when "sticks" are needed.

FairPay provides a dynamic, emergent process for both sides to learn how to make the relationship maximally win-win. That can bring the organization more customers (recipients and benefactors) and get more share of wallet (the amount that the customers can justify and afford to give).

FairPay was developed because the invisible hand of Adam Smith no longer works well in the digital world. FairPay turns instead toward this new invisible handshake -- an agreement to work together in good faith to build a relationship that is win-win.

If non-profits cannot justify support of their mission on the basis of fairness, what basis do they have? If fairness is the basis, what better process for justifying support than FairPay?

Making it happen

FairPay processes are not difficult to build and put into trials, but still require a degree of effort that might challenge the technical resources of smaller non-profits. This represents a major opportunity for a shared platform that can be used by many non-profit organizations. For example, Tessitura Network is a consortium of over 500 arts and cultural organizations that provides a common e-commerce and CRM infrastructure. A shared FairPay platform (and shared tracking of fairness) could benefit many of its members.

I am working on FairPay as a pro-bono project, and would be happy to assist non-profits in exploring how it might work for them. (I can be reached at fairpay [at] teleshuttle [dot] com.)

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[Related post, 1/24/18: Making "Pay As You Wish" More Equitable -- Sustaining the Met Museum (and Others)]

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For a full introduction to FairPay see the Overview and the sidebar on How FairPay Works (just to the right, if reading this at FairPayZone.com). There is also a guide to More Details (including links to a video). 

Even better, read my highly praised new book: FairPay: Adaptively Win-Win Customer Relationships.

(FairPay is an open architecture, in the public domain.)