OnDemand WTP Pricing Research

Pay-What-You-Want Pricing Often Backfires | Science of Us

There are all sorts of after-Christmas sales to be found this week, but the one happening at Everlane has to be among the most unusual: The online store is inviting its shoppers to choose the price they want to pay. The popular Nubuck Street Shoe, for example, normally goes for $140, but should you purchase it this week, you will choose between one of three price points: $126, $91, or $76. Hover over each figure and you get an explanation for it — the highest price means $50 extra profit to Everlane, whereas the lowest only covers production and shipping.

Everlane is the latest, but by no means the first, company to try an experiment like this one. Panera Bread has tried it a few times, first in 2010 and then in 2013, and the most famous example may be Radiohead’s 2008 release of In Rainbows. Really, it’s not so surprising that Everlane would take on a pay-what-you-want promotion, as their entire ethos is about “radical transparency,” and it is pretty satisfying to know the reason why something costs what it does. And yet my own reaction to the sale surprised me. I have had my eye on the Nubuck Street Shoe for months, and was elated to find it included in the promotion. But after some deliberating, I closed my browser without making the purchase, which in retrospect feels like an odd reaction. Here are the shoes I’ve long wanted, and I can choose to pay nearly half the original price. Why didn’t I buy them?

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Pay-What-You-Want Pricing Often Backfires — Science of Us.