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Letting your customers choose the price of your product or service is a daring move, but one that’s sure to generate buzz, just as it is for the band Radiohead.
Radiohead, have shocked the music world by dumping their record label and announcing that they are making their latest album, In Rainbows, available digitally with a price that simply says “It’s up to you” and if you try to get a price after that “No really, it’s up to you”. Here’s some of the buzz it created Time, The Telegraph, MSNBC, Esquire and the BBC amongst many, many others.
It’s a fantastic and bold marketing idea – as your customer to pay a price that they feel gives value to them – ideally suited to downloadable music and other products where the per unit cost is low to zero (the cost being in creating the content). It’s one idea that’s worth thinking about no matter what line of business you are in.
Just don’t, as Radiohead appear to have done, abuse it by changing the offer after your customers have valued it. As the backlash could end up costing you your best customers.
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This blog is about business opportunities and ideas that I spot, think of or hear about and think are useful and interesting. It is intended to provide ideas and inspriation for you to help you find the right business idea for you to then grow it into a successful business.
I thought the Radiohead idea was brilliant. Some people who know far more about the music industry than I do said that Radiohead will lose money because of it, but I doubt that. I don’t even listen to Radiohead and I’m thinking of picking up their album simply because I support that sort of behaviour.
Ben Harper was quoted a while back as saying that if the music industry wanted to stop people from downloading, they merely had to put all CDs at a reasonable price point. Psychologically, people don’t mind spending less than ten bucks. His theory is that customers just aren’t willing to pay $18.99 for a ten track album, and I think he’s spot on.
Great blog. Thanks, and keep up the good work.
I expect they’ll actually make a lot more money as most fans will pay a fair price to support their favourite band.
On top of that they’ve very little cost per unit and they don’t have to split the profit with a record label.
I think they’ve made a mistake in how they’ve handled the buzz and then only releasing low quality versions. Upsetting a customer is one thing, upsetting a fan is another.
There is an Indian Restaurant in Perth Australia, that has no prices, guests pay what they think the meal is worth and if they can’t afford anything, that’s O.K.
They are extremely successful, due I’m sure, to the fact that they have generated hundreds of thousands of dollars worth of free advertising.
When I spoke to them recently, they told me that the vast majority of their guests pay more than they would in similar establishments in the city, and to-date, nobody has point blank refused to pay anything.
Lindsay,
That doesn’t surprise me (or you I expect). The advertising value must punch so far above their weight that it more than offsets any costs / freebies they incur.
I think that’s so true. I’d go just because I like to support that kind of thing, and I’d likely tell all of my friends.
It’s probably a great form of market research, too. You get to know what people like, what they don’t like, what they think is worth a lot or a little, and you don’t have to rely on those feedback forms that everybody lies on anyway.
Great point Naomi it’s going to be some great market research.
I read somewhere that they are in talks with a few labels and plan to release it on cd with extra tracks. Sure all the people who paid normal cd price thinking they had the full album will be happy if they do.