Letting Customers Set the Price
This is fascinating: in Kirkland, Washington, the Terra Bite cafe operates on a “voluntary payment” system, the Boston Globe’s Business Filter blog reports:
The Terra Bite Lounge in Kirkland, Washington has no prices on the menu and gives away free WiFi. “It’s up to the cafe’s customers to decide how much to pay, or whether to pay at all.” Founded as a non-profit by Ervin Peretz, a Google programmer who says he’s in the business of “good karma,” the goal? To “finesse the largesse of well-off latte lovers to cover the tabs of the less fortunate.” So far they’ve served 80 customers a day, who pay an average of $3. He says he needs about 100 a day to break even.
It sounds, of course, like idealism bound to end in financial ruin… but it sounds like they are approaching breakeven.
I don’t have trouble believing that there are people who will happily pay - if they like the place, they understand that if they don’t pay, it will go away and they won’t get to go there anymore.
In a way it’s citizen marketing to the extreme - people not just promoting somebody’s products, but tossing the money into the till even when they don’t have to because they like what they are getting.
And everyone paying must realize that there will always be those who don’t - because they can’t, or because they are just there for the quick hit of a free coffee.
Can it survive? Could this work for another kind of business?
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This is a very interesting concept and I’d like to see it work.I think people will be fine with subsidizing those who can’t afford the service, or for those just in for a quick hit.The trick will be reconciling the feelings of those who pay and those who won’t pay even though they can damned well afford to. If there are folks who exploit the system - sit there all day without paying and jet off in a BMW - then the payers will start demanding that a price schedule is put in place. This will be interesting to watch.