Results Of The 'Pay What You Want' Tangible Goods Experiment
from the sorta,-almost-worked dept
We recently wrote about an interesting experiment with a "pay what you want" business model for an iPad stylus. While I tend not to be a fan of "pay what you want" for tangible goods (since there's a significant marginal cost), the two designers behind the device decided to combine it with Kickstarter's "threshold" setup. Basically, they asked people to pay what they wanted for the stylus, but also only left open 3,000 spots, and said they needed $50,000. Well, the 3,000 slots went quickly -- in just about a day. But the funding didn't quite reach the necessary level. Instead, it came out at just around $45,000.While this is just a single data point, it probably isn't that surprising from a psychological standpoint. I would imagine many people went through the thought process of realizing that they could try any price, but if they went too low... it might not get made at all. So, for people who want to be cheap, perhaps the "logical" price point is just a bit below the necessary average, hoping that some others will overpay and subsidize you. And that's what happened. As some in our comments noted, perhaps a much more interesting (and possibly better) model would be if there were a way to take the 3,000 highest bidders. In that scenario, if you bid too low, you wouldn't get the stylus at all... but others who bid slightly more would. I'd be fascinated to see how something like that worked out.
Either way, with a few weeks left, and the ability to change bids, many expected that enough people would change their bids to hit the necessary threshold. However, rather than wait for that, the designers just added some new fixed-price tiers, that priced the item at the $25 they plan to officially market it at, and a whole bunch of people have paid up, so the overall project did end up going well past the threshold. Definitely an interesting business model experiment, which, once again, highlights one of the risks with a pure "pay what you want" model especially with tangible goods. It can work, but there are pressures to keep in mind.
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Filed Under: ipad, kickstarter, pay what you want, stylus
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Not really a "pay what you want" model...
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Tragedy of the Commons
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Re: Tragedy of the Commons
Copyright is woefully inefficient and if anything, most engineers would look at ways to maximize that goal.
OT - I'm not surprised you came to that amount, it just takes a little more to understand the incentives placed for a person to give X amount and adjust accordingly.
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50k to produce 3000 plastic stylus seems like an incredibly high price. Unless there is some true magic in them, it would appear to be a "pennies a piece" item.
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Someone doesn't know how capacitive touch works, huh?
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http://www.dealextreme.com/p/universal-capacitive-touch-screen-stylus-pen-with-strap-colo r-assorted-55696
I also see that Nextag has them retailing in the $13 - $15 range. It makes it very hard to justify a $25 price tag as their "retail" price. It also suggests that, with a retail price in that range, that each item's marginal cost is in the range of pennies, FOB China.
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http://www.alibaba.com/product-gs/385798480/capacitive_stylus.html
or
http://www.al ibaba.com/product-gs/407851160/stylus_for_iPhone_iPad.html
All in the 20 cent to $1 range for 1000 pieces.
Sorry Mike, a little research can show you how incredibly overpriced this "offer" was, and how people pretty much fairly priced it to retail, which is why their failed.
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And, if by "failed" you mean they've actually succeeded in passing the threshold, then, yes. They "failed." All the away to the bank.
Sometimes your attempts at being disagreeable just make you look stupid.
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Do it right
The concept of a second item auction (http://en.wikipedia.org/wiki/Dutch_auction#A_second_item_auction) is somewhat similar to a Dutch auction but better applied to a multi-item action. It's the way Treasuries are sold and some IPOs have even been sold this way including GOOG (Google).
An interesting, if not old, article on the process can be found at the Fool's site: http://www.fool.com/investing/general/2004/05/26/going-dutch-with-google.aspx
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Wait, how would this be enforced without copy'right'. Not that I support such laws.
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"but others who bid slightly more would."
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They got their funding
I like Mike's idea (highest bidder) but it might be challenging to implement. When you bid, you actually pay that amount. How would they work getting the money back to you if you don't bid high enough? I know this wouldn't be insurmountable, but it would mean a change in how they deal with the funding. I think it would essentially convert the process to a pledge method, then you have to worry about people bailing on the pledge when it's done.
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Re: They got their funding
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Re: Re: They got their funding
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