Honesty box pricing is an interesting concept that’s been tried and tested, with varying degrees of success.
In 2007 one of the biggest bands of the decade, Radiohead, decided that they would make their much anticipated album, In Rainbows, available to anyone to buy on a pay-what-you-like basis.
In this FT.com article Radiohead’s frontman Thom Yorke explained that: “Yes, it probably would give us some perverse pleasure to say ‘Fuck you’ to this decaying business model”. By which he meant the music industry, which looked on aghast as one of the world’s biggest rock bands opted out of the record label system. Worse, Radiohead were offering fans the chance to pay whatever they chose to download new music.
As it turned out their honesty box policy was a bit of a financial disaster for them – a rumoured 62% of people didn’t pay anything to download the album. But the political point was made and the path paved for other artists to adopt the independent principles eshewed by Radiohead.
From the dizzy heights of rock to the leafy lanes of Cumbria honesty boxes rely on our inherent goodness to be successful. A leisurely trip up the Lyth Valley will take you past farms with unmanned shops offering the famous damsons as well as eggs. The honesty box often apologetically tucked to the side, confirming our idea of a rural idyll in action.
And then there is the story of the digital football magazine with an honesty box approach to payment – you can pay what you like (except the minimum payment is £5 and the suggested payment is £10).
I have some sympathy with this pricing approach. It’s easy enough to pay an honesty box for a cup of coffee, a newspaper or a second hand book but a digital magazine is slightly different and less well known a commodity. Sometimes it’s nice to get a guide.
Principles of honesty box pricing
- customers will pay what they can afford
- customers will not take the p**s
- customers will pay what they think it’s worth
- customers won’t cheat someone else
- customers are mature and reasonable adults
- customers have a good nature that you can appeal to
Why does honesty box pricing work?
- customers feel trusted
- customers know what the rough value is
- we all want to believe in the goodness of others
- honesty box pricing makes us feel good about ourselves
When honesty box pricing might not work:
- when people are unsure what value to place on something – this takes too much thought
- if people don’t feel any emotional connection to the seller then they won’t necessarily respect the honesty box principles
The principles behind honesty box pricing are something we’re experimenting with at Learning Pool at the moment.
We’re holding our annual conference in September and have been told by some of our customers that they’d love to come but their council won’t sanction the cost.
So we’ve created a number of free and reduced price places for these customers.
We’re very interested to see whether the councils who’ve told us they have no money will take the free places or and whether they’ll all be taken up by those who have money but are quicker off the block.
Early indications seem quite heartening. Free places are being left although reduced places are going fast. I’ll update in a few weeks time to let you know how things pan out.