Imagine a world where you don’t have to spend money.
You can spend money if you want. You just don’t have to.
Everybody hates spending money, right? Everybody likes buying things, but who likes spending money? Nobody, that’s who.
Money is the ultimate middleman. We all like having it, just not putting in the money to earn it. Fair enough. We’re all human.
The truth is, one of the biggest off-putters for consumers is spending money. Don’t get me wrong – I’m not talking about shopping, you know, the thrill of going into a store and buying the new iPhone or a nice piece of clothing. No, that’s fun.
I mean the physical process of having to pull out your card and punch in your details. That’s the worst.
Even worse? Paying before you get your stuff.
The Power of Paying Later
It may seem like a minor difference, but it’s really not, and the fact that businesses understand this has given rise to the pay-later format. You know, get the goods now, pay for it later. It’s not just a shady salesman tactic, it’s everywhere. Half the time, we don’t even notice it.
Take restaurants, a business where it would be so easy for a customer to just walk out after their meal without paying. Despite this, most restaurants will ask that the customer pay at the end.
The obvious reason is it makes it easier for customers to buy more than they originally planned. Finished that pre-paid 10 dollar meal but you’re still hungry? You’ll feel guilty about pulling out your credit card twice. But if you haven’t paid, it doesn’t seem strange to order seconds.
But it also boils down to the simple luxury that we don’t have to worry about money, until the end. You walk in and sit down, enjoy the surroundings and ambience, eat and drink and enjoy yourself. When you’re ready, you can then worry about how much to pay (and of course, who will pay!)
Or for an even more recent example, think of smartphone plans. News pundits talk about how even low-income people can afford smartphones. The reason, obviously, is that phone and mobile companies have partnered up to make it easier than ever to get smartphones through contractual, multi-year plans which often involve little or no money down.
So it doesn’t matter if the payment happens 36 minutes from now or 36 months from now. All that matters is that you pay later.
And that is powerful selling.
Consider many businesses, trades and professions that request payment later, such as doctors, dentists and lawyers. Now compare it to businesses that charge upfront, such as supermarkets and gas stations.
When you add it all together, you notice a trend: often the more ‘necessary’ a product or service seems, the more likely they will charge later.
It’s all about necessity.
Subjective necessity, that is. We all know your physical health is more important than keeping your gas tank full, yet many people would bypass a doctor’s check-up, yet couldn’t imagine going a week without their car.
Marketers and salesmen know this. Businesses, trades and professions have naturally learned to adjust their payment plans according to their target audience, ie, how ‘necessary’ they seem to their audience.
Have you done the same?
What’s beginning to happen now, is that businesses aren’t just offering unique payment methods, but many are reconsidering whether customers need to pay at all.
And that might, just maybe maybe be just the thing you’re looking for.
Hear me out on this one.
If time = money, then we’ve all worked for free.
Any business with the slightest knowledge on digital-age marketing has learned that, like it or not, they’re gonna have to give something away for free. Usually, this is in the form of social media content, like blogs, videos or free e-books. In fact, if you stand by the old business adage that ‘time is money’, just consider all the time entrepreneurs spend working. Working Really. Really. Hard.
In that case, a young Bill Gates did lots of work for free.
Yes, the young Bill Gates who famously worked 80 hour weeks and complained about software developers giving away their work for free.
Surely, Bill wasn’t directly profiting off each of those 80 hours. No, he understood the long term benefits of burning the midnight oil. That is, if he works extra hard out of his own time to produce a better and appealing product, it will ultimately be more profitable.
So both Bill Gates and those software developers were doing things that many people do today – work for free.
The basic idea is what we see everywhere in modern, digital age marketing: create free content that will encourage the customer to buy the actual product.
But what if the actual product were free?
What if, at the end, you just kinda, asked them to pay… whatever they want? Any amount their heart desires? They could give you 500 dollars or 1 cent. It’s entirely up to your customer.
Except, instead of the ‘donate’ button being tucked away forgotten on the side, it’s offered after the audience receives their product, right in front of their eyes.
At first, the idea seems absurd to some, but when you consider the amount of content basically all businesses are giving away for free, from articles to e-books and videos, many of which require hours of hard work, it doesn’t seem so strange after all.
So why are businesses adopting PWYW models?
Most of it relates to customer loyalty. While customers generally are flattered by PWYW, loyal customers potentially spend more than expected if they have a true appreciation and respect for the product.
Basically, a happy customer is happy to pay.
I guess that’s the main argument – the ‘if’. If you focus on your market, then focus on the product, you don’t have to worry about the money. That usually takes care of itself.
But there’s always a downside. Aside from cases of customers driving restaurants into extinction by taking advantage of their PWYW, there’s an even greater question of how this is affecting consumer mentality. In the age of Uber, is consumer culture expecting too much for too little?
Who knows. No two business are the same. A fair rule is that the more digitised your product is, thus the less effort it requires to replicate, the more willing you could be to adopt a PWYW model.
So that takes out of the equation restaurants, which are highly competitive, labour and supply intensive businesses offering both products and services.
1 cent hamburger, anyone? It just doesn’t feel right.
But let’s say you created a computer game. It may take years of development, but after that, you’re mostly on easy street. It requires no more effort for people to download it online.
And with so many games Free To Play, a PWYW system is not an unreasonable alternative.
In the information industry, with so much content circulated for free, a PWYW system has the chance to remind us all that sometimes in life, it’s okay to spend a bit of money.