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Pay What You Want - Pricing Experiments

Recently I've starting taking more a more proactive approach to my site and my passive incomes, but I've been experimenting with my sites for years. One of my most recent experiments was with flexible, "Pay What You Want" pricing. Here's how it went.

A Little Background

A little while after I launched Cheatography, I started charging for the cheat sheets on Added Bytes. Despite the same (or in some cases, better) cheat sheets being available on Cheatography (and this being displayed in a great big black box at the top of every cheat sheet page), lots of people still bought the cheat sheets.

There were two reasons I started charging for some of the cheat sheets I'd previously released for free. First, I was curious about what sort of value they had for people. And second, I wanted to see if people online would pay for something that had value for them, despite it being available elsewhere for free. And, if I'm being completely honest, I also wanted to earn some more money. So, three reasons, really.

What I found out was roughly what I expected. Most people don't buy when something is available for free. But some do (and I'm very grateful to them). And the extra trickle of income was much appreciated - it's been enough to buy the occasional beer.

The Experiment

The cheat sheets that were for sale (four of them - PHP, CSS, mod_rewrite and Regular Expressions) were previously for sale at $2 each. In mid-February, shortly after offering a premium version of Readability-Score.com for a pay what you want price, I decided to try a new experiment, and switched to Pay What You Want pricing for the cheat sheets too. The same cheat sheets as before, now available for any price (including $0). I was able to set a recommended price, as well, and I tested that at several points between $1 and $10.

The idea is that people can pay an amount that sits somewhere around a figure they can comfortably afford and the value the cheat sheet provides to them. For a product with no per-copy cost to produce or distribute, and which is available for free, this seems like an ideal way to offer it for sale, without making the sale compulsory.

As with the initial experiment, I had a few expectations. I thought:

  • The number of sales where people paid over $0 would remain about the same.
  • There would be more sales from people paying $0 than people paying over $0.
  • The average price would be less per sale than at the moment.
  • The average price would be entirely unaffected by the suggested price.
  • Making the average price paid by previous customers visible to people would not affect the price they paid.

I was half right:

  • The number of sales where people paid over $0 would remain about the same.
    The number of sales remained roughly the same (if anything, slightly up, but not by much).
     
  • There would be more sales from people paying $0 than people paying over $0.
    Yes, lots more people started going for that attractive $0 price point.
     
  • The average price would be less per sale than at the moment.
    No, the average sale is higher than before, and as of finishing the experiment stood at $2.81.
     
  • The average price would be entirely unaffected by the suggested price.
    No, the suggested price does have an effect - setting it to odd figures (like $3.14, for example) results in sales for that exact figure. Setting it higher pushed up the average price. But setting it too high caused it to fall. The sweet spot appeared to be around $7. I have no idea why that number in particular.
  • Making the average price paid by previous customers visible to people would not affect the price they paid.
    No, making the average price visible increased the average paid by other customers. I can only assume they wanted to pay more than the mean, though I'm not sure why that is.

Notes

There are a couple of things worth noting from my time selling the cheat sheets and the pricing experiment. First, even when you put a link to a free version product (a product which used to be free) in a great big black box at the top of the page, not everyone will spot it. I received a few grumpy comments and nasty emails in the weeks and months after I put a price on the cheat sheets because they were for sale, even though they were still available free. I still can't decide if I didn't do enough to make the free version obvious, or if the tiny minority not spotting the huge notice at the top of the page is actually entirely their own problem.

The $0 price sales are a little perplexing. Why go to the trouble of going through a checkout process to pay $0, when the same cheat sheet is available for free (and in better quality) elsewhere? The only explanation I can come up with is that these sales are largely in a hurry and missing the giant Cheatography link at the top of the page.

This pricing experiment wouldn't have been nearly so easy if not for the wonderful people at Gumroad, the service I use to sell digital products here on Added Bytes (and the Pay What You Want subscription system at Readability-Score.com). Pay What You Want pricing is built in to Gumroad, and an absolute doddle to set up.