You may have heard about “Shopify.” It’s a tool that helps people set up online shops. Just like when we go to a store and see items with price tags. In Shopify, shop owners can put price tags on their items.
With the Make an Offer app on the Shopify store, you can easily implement this amazing strategy on your store and easily keep track of transactions.
But there’s an exciting twist! Shopify allows some shop owners to let customers choose how much they want to pay for an item. In the recent past store owners used this strategy to boost sales and give more margin to the customers.
Stores selling digital products like courses, digital content, and artworks are using this strategy to build their customer base by offering offers and discounts through making an offer strategy.
It’s called the “Pay What You Want” strategy. In this article, we will learn what this strategy is, where it has worked well, and its good and bad sides. We’ll also look at how Shopify makes this offer. So, let’s dive in!
- What is Shopify’s Make an Offer Strategy
Imagine walking into a store, and instead of seeing a fixed price on an item, the shop owner says, Make an Offer and pay how you want it Sounds fun, right?
That’s the idea behind the “Pay What You Want” strategy. It means customers can choose the price they want to pay for a product. It’s like when we have a jar for tips, and you can put in any amount you want.
- Scenarios Where This Strategy Boosted Sales
With this unique selling idea, you can pitch your target audience and invite price the product accordingly that they want to pay for it.
To make this idea more compelling and if you are thinking about this great idea to upsell your products let’s look into these real-world examples that will help you in deciding whether this will work for you.
Story 1: The Music Band’s Surprise!
There was once a famous music band that wanted to release their new album. Instead of setting a fixed price, they used the “Pay What You Want” strategy. Many fans paid more than the usual price because they loved the band so much. Other people, who didn’t know the band before, decided to give their music a try because they could choose their price. In the end, the band made a lot of sales and got many new fans!
Story 2: The Bakery’s Special Day!
A bakery decided to let people pay what they wanted for a day. Word spread quickly, and a lot of people visited the shop. Some paid little, but many paid more than the usual price to support the bakery. The bakery not only sold many pastries but also made people happy. They became the talk of the town!
What are the benefits of the PWYW pricing strategy
- As mentioned before, the Shopify make-an-offer strategy has proven its significance by giving customers the opportunity to price the product.
- You can beat the competition and easily compare the profit margin among the quoted prices by different customers.
- When sellers use the PWYW strategy, they send a message to the buyer. This message is: “We trust you to determine the value of our product.” By doing this, sellers show a lot of faith in their customers.
Understanding the Cons of the “Pay What You Want” (PWYW) Strategy
”Pay What You Want” might sound like a dreamy way to shop, but for sellers, it can come with some challenges. Let’s dive deep into the cons of the PWYW strategy:
- Uncertain Earnings:
Imagine you’re a shop owner, and every day you need to make a certain amount of money to pay your bills, buy new stock, and maybe save a bit for the future. With fixed prices, you can predict your earnings more easily. If you sell 10 items at $10 each, you know you’ll earn $100.
However, with the PWYW strategy, things get unpredictable. One day, many customers might pay generously, but on another day, they might pay very little or even nothing! This unpredictability can make it hard for shop owners to plan their finances and can lead to stress.
Let’s say Tom has a coffee shop. If he sells a cup of coffee for $5 and sells 20 cups, he knows he’ll earn $100. But if he uses PWYW, and ten people pay $2, five pay $5, and five pay $7, his earnings can vary a lot.
- Not Suitable for All:
While PWYW can be an exciting strategy, it doesn’t fit every product or service. Items with a high production cost, limited stock, or luxury goods might not be the best fit for this strategy.
Selling a handmade, intricate jewelry piece that took weeks to create under PWYW might not be the best idea. If customers pay less than what it costs to make the jewelry, the artisan could face a big loss.
Similarly, services that require a lot of time, expertise, or resources might not benefit from PWYW. Imagine a professional photographer offering a full day’s photo shoot using this strategy. If the client pays too little, the photographer’s efforts might not feel worthwhile.
- Possible Underpayment:
While many customers appreciate the trust of PWYW and pay fairly, some might see it as an opportunity to get a bargain. There’s always a risk that some people might pay far less than what the product or service is worth.
Let’s consider a restaurant that offers PWYW for its buffet. Some diners might enjoy a full meal, eating multiple plates of food, but then decide to pay just a small amount, thinking they got a great deal. This could mean the restaurant doesn’t earn enough to cover the costs of the food, staff, and other expenses.
- How Does Shopify Offer This Strategy?
Remember how we mentioned Shopify at the beginning? Well, Shopify gives shop owners a special tool to set up this “Pay What You Want” strategy. When shop owners use this tool, their online shop will show a box where customers can type in the amount they want to pay. It’s easy and simple!
The “Pay What You Want” strategy is like a fun game where customers decide the price. While it has its ups and downs, it’s a fresh way to think about shopping. And with tools like Shopify, it’s becoming even more popular in online stores. Next time you see the “Pay What You Want” tag, you’ll know all about it!