Revolutionary Pricing System

Music, film and video game makers face a new online, digital world. And some are testing a revolutionary pricing system: pay-what-you-want. But a new study finds that when consumers can name their own price, many may opt-out of buying at all. The study is in the Proceedings of the National Academy of Sciences. For the research, tour boat passengers posed for photos. Each boat ride announced a price of 15 dollars per picture. But they then charged either 15 dollars, 5 dollars, or the option to pay what you want. As expected , the fewest tourists purchased photos when they had to pay full price. But more customers bought photos when they cost 5 dollars than when prices were pay-what-you-want--which could have saved passengers, even more, The researchers suggest that choosing to pay less than an announced lower-than-expected price made people feel cheap. With choices then limited to spending more money or feeling like a tightwad, potential customers simply opted out of the purchase. So on sea or land, a low, set price may catch the most fish.