Welcome to One Woman Experiments, where daring business women experiment with different parts of their business in order to find best practices. We hope these mini-experiments help improve your business and inspire you to test-drive new strategies. Have an experiment you want to test out and document? Check out our ideas and guidelines!
We asked the question, "What would happen if you experimented with a Pay What It's Worth (PWIW) model in your business?" That's right- no set prices for your clients or customers, only allowing them to put a price tag on the value of your work.
Tara Joyce of Elastic Mind stepped up to share the lessons she's learned through incorporating PWIW pricing into her business. Be sure to check out her checklist "Is Pay What It's Worth right for me?" In true meta fashion, you get to set the price!
Tara, what is your experiment and why?
I am experimenting with allowing my customers to decide how they value and what they pay for the service I provide to them. I call this method Pay What It’s Worth (PWIW) pricing.
I started my experiment with PWIW around 5+ years ago, when I decided to become self-employed and start my own business. I believe I had one client that I used "traditional" pricing methods with before I began to explore the concept of not needing to set prices, and instead allowing my customers to determine the value they were receiving from my work.
This exploration began because the various pricing methods I was already exploring didn’t feel quite "right." I was interested in the question: Can I create a more value-focused way of exchanging with others?
Also, when I thought about the concept of a business NOT setting their prices, and instead allowing a customer to determine the value of what they receive, it totally blew my mind in a terrifyingly exciting way. And so I knew I needed to explore it more.
Without sounding too much like middle school science class, tell us about your methodology.
Initially, when I began my Pay What It’s Worth experiment 5+ years ago, I entered with very little structure. My business was brand new and my pricing system was one of many systems I was building at that point. At the time I figured that a great metric would be whether I had any business at all, that the revenue from it was sustaining my needs, and that my client’s feedback and experience was positive.
As I’ve grown into the pricing method (and in my self-worth), I have gradually adjusted my methods, and what I am measuring. Mainly these adjustments- in the areas of my communication, my information, my boundaries and openess, and my billing and payment systems- are made based upon the feedback I receive from my customers, my own levels of satisfaction, and the things I learn as I grow in my business and life (with a strong focus on my self-worth and values).
During the years that I have been experimenting with Pay What It’s Worth pricing, I have documented and experimented with various techniques and strategies for creating a strong system where my customers are able to fairly and freely value what they receive from my service (and products). And that I, in turn, feel fairly valued in the exchange too.
How did you feel when you adopted the new practice?
At first, and perhaps for the first year, or two (or three!), I was terrified, and electrified by what I was practicing. There were so many unknowns, and while I believed whole-heartedly in what I was practicing, I still had my moments of wild anxiety where I wondered what the hell I was doing, and if I was just making my life harder. But as I continued to practice my new pricing method and got more comfortable with what I was exploring, I quickly noticed how great it felt to practice, and how strong the relationships of exchange I was building were. What was (and is) fantastic about Pay What It’s Worth pricing is that when it wasn’t working for me, it was easy to note, and adjust, because I was already so connected to what a fair exchange with someone felt like for me.
The most powerful aspect of using Pay What It’s Worth pricing for me has been how it has supported me in exploring my money stuff. As my awareness of my own value (and, in turn, your value) grew, so did the value of my service.
Any revolutionary or surprising insights?
Oh boy, I’d say so! Probably the most (r)evolutionary insight I’ve uncovered is how much my intentions, communication and connection with my customers affected my results/findings.
It has been intriguing to note how my own perspective (what my intention was and how I communicated it) shifted the monetary and experience-based return I received. That, for me, has been the biggest question and area of exploration — how can I continue to get better at connecting with and communicating about money, value, and fair exchanges?
It’s also been cool to learn that a person’s ability to pay (i.e., what they feel they can afford) is only one of four factors that affect their actions with money, and what they pay. The others are their levels of satisfaction, integrity, and market awareness. And these levels shift and, in a mutually growth-oriented relationship, grow over time.
On average, do people generally pay less than or more than you anticipate?
Generally, I don’t anticipate what people will value a product or service at, as I haven’t found it helpful, but I have found that I feel very valued by the people who buy my products and services.
What is the highest and lowest people have paid you for the same product or service?
For a product example, I have been received at the lowest $0.07 and at the highest $40.00 for the same ebook, with most payments being somewhere in the middle of this large scale.
For a service example, I have probably received at the lowest $25.00 and at the highest $100.00 for the same service, with most payments being somewhere in the high end of this scale.
What’s interesting is in my experimenting I’ve noticed I can identify why there is such a large discrepancy in payment amounts, how I can adjust it, and how it relates to my communication and connection techniques with the buyer. It’s also interesting to note the lower payments only occurred when I first started selling the product/or service.
What are the toughest and best parts of your experiment?
Perhaps the toughest and best part of my experiment is when I question myself about why I am doing an experiment with money at all. I question if I could be monetarily more rich if I had set prices, and stopped exploring money and value in the way I am. These moments are cool for me though because I get to check in with myself about how wealthy I truly feel, and what my actual goals with my work and life are. My moments of fear remind me that while making a profit is important and critical, it is only one of my motivators that I need to take into account.
Any advice for people doing this kind of experiment?
I’ve found your intentions will determine the level of happiness and wealth you create from using this pricing method.
If you are focused on quality and value, connection and communication, and working on your own feelings of self-worth, this experiment can be a real heart-opening and wealth-opening one.
Do you think you'll stick with PWIW pricing?
In the end, I want to leave myself open to receive my true value and I’ve found that by employing Pay What It’s Worth pricing, I’m not setting restrictions on what I can receive. For that reason, I know I’ll stick with it. For it allows me to explore if the sky’s truly the limit for me, or if I really can reach further.
Questions for Tara? Ask them in the comments!