First came mass customization- products made to your specifications. Now, we are being handed the keys to another element of the marketing mix: price. Some businesses are experimenting with name-your-own price, an approach in which the customer decides how much he or she wants to pay for the product. Name-your-own price gained noteriety recently when the British band Radiohead sold downloads of its latest CD “In Rainbows” on the Internet for a price to be determined by the customer. This decision could be to pay nothing at all for the download. A similar approach is being used by Paste Magazine for annual subscriptions to its music and entertainment publication, with a minimum price of $1 accepted.
Is name-your-own pricing the next big thing in marketing, or is it a risky, if not foolish, decision that allows people to walk away with your products for free? It is not an approach that would work in all industries, especially for products that have high variable costs. Giving away products and incurring materials costs with no assurance of recouping them does not seem to be a recipe for profitability. In the case of Radiohead and Paste, costs are less of an issue, so it could be argued that some revenues are better than none at all. The brand exposure received from the media attention and making it easier for consumers to experience their products could lead to the strategy being successful for Radiohead and Paste. Link
