The “pay what you want” (PWYW) pricing model, when implemented correctly, has proven to be a great option for both sellers and buyers (see: Radiohead). In fact, recent research has backed this up. Here at Gumroad, we’ve adopted this flexible pricing model and have seen similar success, particularly when the sales go to charity.
However, something interesting occurred during the last week with an item that was for sale via Gumroad. The content creator wanted to give the item away for free, so our $0+ pricing model was employed merely because we don’t have a flat $0 option. And then all of a sudden, a funny thing happened. People started to pay for the content despite the fact that the intention was to give it away for free as a promotion. At first, we thought that buyers didn’t know they could get the content for free. But at a certain point it became clear that people simply wanted to support this content creator. Multiple buyers were paying well above the market price for this item. And then something else strange started occurring. A rather significant percentage of people who chose to pay for this item paid $1.29, a seemingly random value - but in actuality, it is likely the amount that iTunes would have charged for the content.
PWYW has a track record of success and is beneficial to both sellers and buyers. And as an observer and analyst of data, it’s been truly fascinating to watch how the market dictates the value of content.