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.

Why the PWYW model?

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

After using the PWYW model with dozens of clients, I decided to review existing literature, to help organize my own learnings.

Although PWYW models have been used extensively, a lot more research is needed to understand the psychology behind it. But a few points that stand out:

📌 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.

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

What is in the research matches my own experience:

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

Secondly, I am very aware of how this approach forced to me to challenge my own unease and beliefs around money, identity, value and self-worth. Which is what I wish for my clients as well, as part of our journey.

Finally, even though I do realise that skepticism towards this model can increase uncertainty, I am still very interested in the upside of focusing on the value we create together. All of which is crucial to the way I want to work.

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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.

How 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.

   
   

   *For first time clients we normally start with one session.

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.

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

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