When you are given the choice to pay as you wish, would you be more inclined to pay more or less? Shops test this idea in Asia, but does it work?
The concept of pay-as-you-wish is simple. You walk into a restaurant, you pick the food you want to eat and then you pay whatever amount you fancy.
Simple enough, right?
While the theory sounds easy enough, there is actually a complex underlying dynamic behind it.
Most of these pay-as-you-wish establishments are often tied to charities. As such, when you’re about to drop that S$5 note into the box as “payment”, you stop to think about the cause you’re supporting.
Knowing the value of items and being “forced” to pay its value is the traditional method of buying and selling items. But nowadays, shop owners are increasingly exploring the idea of pay-as-you-wish.
Especially if they have an element of charity.
The psychology behind pay what you want services
The hope behind this concept is that people will not shortchange you if they believe they are donating to a cause instead.
However, this concept requires a deep level of understanding and common societal knowledge for it to work.
In Asia, or at least Malaysia, the concept is still fairly new. It is approached very delicately by both shop owners as well as consumers.
While many of the younger, more educated individuals would be inclined to pay extra or sometimes even double what they believe the value of the item is worth, others may not.
Pay-as-you-wish for clothes and other secondhand items
Recently, a local retail shop, Kedai BLESS hosted the first ever pay-as-you-wish charity bazaar in Kuala Lumpur. It sold secondhand items such as clothes, books, toys, shoes, accessories, household items and more.
People were told to come, pick out whatever they wanted and then drop a donation in the box on the way out.
I witnessed firsthand, as a volunteer, how much some people would donate.
Some, after learning about the causes Kedai BLESS supports, would pull out a wad of cash from their wallets and drop it in the donation box, without picking up any items.
Others would pick out bags and bags full of items only to stealthily disappear without donating a cent. It was both a fundraising and experimental exercise.
Many still questioned the concept. They could not comprehend that they had the deciding rights when it came to the price. They would ask for suggested donation amounts.
Still, Kedai BLESS made over RM6,000 in the two days in operated the pay-as-you-wish charity bazaar and sold over 1,000 items.
Considering many of the items Kedai BLESS sells is priced at an average of RM5.30, it would seem that the exercise proved that many Malaysians would donate MORE than the item’s perceived value.
Still a big risk
In other local examples, Summersault Cafe and Annalakshmi Restaurant in Kuala Lumpur also extend the pay-as-you-wish concept to their patrons.
Food, however, is more of an everyday necessity compared to clothes, allowing both establishments to operate permanently with this concept.
Malaysians (as much as many other parts of Asia) are known to love getting free stuff – be it food or apparel.
So adopting a concept like this can be a huge risk to business owners. It seems like there is a long way to go for this concept to be widely accepted and understood in Malaysian culture.
Like this article? How else does our psychological makeup affect our financial decisions?