Pay What You Want Pricing Scheme

Topics: Cost, Coffee, Variable cost, Fixed cost, Costs, Mind / Pages: 6 (1388 words) / Published: Mar 19th, 2014
‘No Price Is Right’

Rebecca Liyun Wiener
MKT4413 – Idea Assignment

I vaguely remember in my Junior College years (~2009), I came across a café in Dempsey Hill that utilized a very interesting pricing practice: a Pay-What-You-Want pricing scheme. In other words, they had no price for their coffee, but the restaurant charged for their food. Being a typical Singaporean, I was very skeptical over this practice and various thoughts flooded through my mind: ‘this would never work!’ ‘Is the coffee poisonous?’ ‘Free ah? Really? What if no one pays!’ My brain simply could not fathom how such a mechanism would work, and I sincerely believed that I could not possibly be the only one. I proceeded to make bets with myself that this idea would surely drown soon. Nevertheless, despite these many negative thoughts, I was drawn to the peculiar idea. Thus I sat down for a meal and yes, you guessed it, a cup of coffee.

1st reaction: ‘Nobody will pay for it!!!!’

We live in an age where the Internet provides free music, films and books at the tip of your fingers. DeNardis questions ‘what motivates people to pay for anything if there is a way to get it for free?’1 Could we turn into a society where the habit of practicing honesty fades into oblivion? The renowned behavioural economist, Dan Ariely, dismisses the notion of a pay-what-you-want system arguing that such practices will be the very cause to exacerbate cheating. 2However, I beg to differ.

One unique example would be from 2009 where the attorney general’s office in Indonesia opened thousands of honesty cafes as part of a national campaign against corruption. In a country where practices in both business and politics are not as transparent, it was hoped that such honesty cafes inculcate the right behaviour in the young and make honesty a conscious effort for the older. Though no results were released, but it was said that only 5% of the cafes had run into complications. 3

Furthermore, there are

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