How it works: Pay-What-You-Wish model for business coaching

IDKE uses a participative pricing model, namely the Pay-What-You-Wish model. The core of it is pretty simple, we offer a service and only after the value is created, the client gets to set the price. No minimum or maximum.

For the past year I've been testing out what is called a participative pricing model, namely the Pay-What-You-Wish model, with my business IDKE Lab.

The core of it is pretty simple, I offer a service and only after the value is created, the client gets to set the price. No minimum or maximum.

I discovered this model when I first met BrainStore in 2014 and it was a part of what attracted me to become a Brainstore Partner many years later.

The first question one might have is why? Why am I attracted to this approach? My gut reaction to it was curiosity. And today, more and more, I am interested in different ways of building businesses and relationships.

Recently I spent some time reviewing the existing literature around it. And although PWYW models have been used extensively, a lot more research is needed to understand the psychology behind it.

A few points that stand out after my reading:

📌 There is a general consensus on the fact that most people tend to pay what they perceive to be a fair price. There's a willingness to do the "right" thing rather than paying nothing or extremely low amounts. 

📌 PWYW models induce high levels of both positive and negative emotions that need to be addressed. A high level of trust is needed.

📌 Skepticism towards the pricing model and uncertainty can increase negative emotions and reduce customers' use intention.

📌 Offering an anchor price, a suggested price, can have mixed results in payout amounts and increase positive or negative emotions. This is particularly relevant for radically innovative products.

📌 PWYW can promote active participation in value co-creation. And can lead to feelings of increased self-efficacy and confidence.

It's incredible to me how much of what I have already experienced, I have found mirrored in the research. 

First of all, people OVERWHELMINGLY want to pay a fair price to the best of their ability.

Secondly, I am very aware of how much personal discovery has been tied to this approach. I know it forced to me to challenge my own unease and beliefs around money, identity, value and self-worth. Which is what I always wished for my clients as well, as part of our journey.

I realise that uncertainty can reduce the willingness of clients to engage, and in order to reduce uncertainty, I offer an overview of the process.

What does the process look like?

The process looks as follows:

1. Initial assessment: during a call, we get to know each other and set the grounds for our collaboration | 20 minutes

2. Proposal: we set goals, expectations, timeline, resources

3. Online session(s) | from 1 to 3 hours

4. Report: You receive a well-structured digital summary of the output

5. You set the price: After receiving the results you reflect on the value, share your feedback and set the price.

Additionally I present my clients with the following guidance on how to set a fair price:

How can I set a fair price?

Please remember there is no right or wrong in this process. This is just another step to building our relationship. Here are a few questions that you could ask yourself when looking to set what is a fair price to you.

1. What would delight both parties

Which price would have both parties interested in working together in the future?

2. The ROI approach

How long you will be capitalizing on the results?

What impact on revenue do you expect over the next years?

What impact on costs do you expect over the next years?

What's a fair share of 2 and 3 in % for IDKE?

3. Competitor's approach

What would a comparable output have cost through a different provider? Provided these other sources would have been ready, willing, and able to do the magic.

4. The anchoring approach

If you've never worked with a business coach, how much do you pay for other personalized professional services (from an accountant, therapist, designer, event planner..)?

5. The chatGPT approach

Try to ask for some 21st century advice to get insights that are more tailored to your country, service or industry.

I am now considering offering multiple pricing models, with the option to use either a traditional fixed price model OR a PWYW model and gathering feedback from clients, partners and leads.

All in all, I have been very interested in this approach because of its focus on the value created while learning together. All of which is crucial to the way I want to work.

More questions? Send me an email at alessia@idkelab.com.

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Sources:

• Ashish Kumar Gupta, Shivendra Kumar Pandey & Dheeraj P. Sharma

  (17 Sep 2024): Pay what you want pricing: should marketers use it to introduce innovative

  products?, Journal of Marketing Theory and Practice, DOI: 10.1080/10696679.2024.2398698

• Wittstock-Lang R, Bekk M, Spo ̈rrle M (2023) I do not want to set my own price! Indirect effects of emotions and moderation effects of skepticism explain reduced use intentions towards participative pricing models. PLoS ONE 18(2): e0275499.

• Lin, Z., & Souma, T. (2024). The Impact of the Pay-What-You-Want Pricing Experience on Customer Behavior: Focus on Willingness to Participate in Value Co-Creation. Sage Open, 14(4).

• Gerpott, T. (2017). Pay-What-You-Want pricing: An integrative review of the empirical research literature.Management Science Letters , 7(1), 35-62.