Pay what you would like valuation (PWYWP)- however will it work?
Pay what you would like valuation suggests that a business or a private offers a product direct to clients|the purchasers|the shoppers} and so it's left up to the client what the client needs to pay or perhaps if the customer needs to pay.
The pay what you would like valuation model works well on 2 levels. One is that free product can attract many purchasers and as a result, you'd be ready to market your product at no value.
Precautionary tale
There also are several cautionary tales related to the pay what you would like valuation strategy. you ought to most likely take care what quite business you're in to even apply the Pay what you would like a technique.
If you've got associate e-book, a pay what you would like valuation strategy is maybe an honest plan. But, if you're a eating house, that operates on terribly skinny margins, it's not a awfully sensible plan.
How will the pay what you would like valuation works?
The pay what you would like valuation is split into 3 main varieties. every has its own benefits and drawbacks, and its own operating technique. The 3 pay what you would like valuation models area unit shown in figure one below:
Figure 1: Pay what you would like valuation varieties
The 3 kinds of pay what you would like valuation area unit Ex Post valuation, charity components and continual dealings. every kind suits a specific variety of business. the businesses ought to make certain what variety of valuation model suits them the most effective.
3.1 Ex Post valuation
Ex-ante suggests that, ‘before the event’, and this is often the same old sale model adopted by firms. as an example, after you area unit shopping for one thing on-line, 1st you buy it, and after you receive it.
The ex-post valuation means 1st, the client gets the merchandise, and so he pays for it, after all within the pay what you would like valuation if the client even needs to buy it. So, you'd receive the money once the client receives the merchandise.
3.2 Charity components
The valuation component is far and away the foremost wide used and known pay what you would like valuation strategy. you want to have seen it being employed somewhere. the same old line is, ‘If you purchase one in every of our product, some of it'll be given to the charity’.
This pays what you would like valuation strategy is employed to attractiveness to people’s sympathy. This helps increase the sale of product as individuals feel sensible after they area unit shopping for that exact product. So, this strategy uses emotions to sell to individuals.
3.3 continual transactions
This pays what wish|you would like|you wish} strategy ought to be used for businesses UN agency want to draw in repeat customers. this is often conjointly known as truthful pay. This works by knowledge on transactions of one client.
Then the vendor will use this knowledge to form the choice of whether or not to extend product giving thereto client. this is often primarily associate incentivization theme. The client is aware of that he/ she is going to reclaim offers within the future if he/she sticks with the truthful pay system.
Conclusion
Pay what you would like valuation could be a high risk and high reward strategy. the corporate ought to do its analysis and verify whether or not this is often the correct strategy for it.