Charity Voluntary Model

    In October 2007, Radiohead began selling their new album In Rainbows at a free price. Each buyer could pay any amount - one hundred dollars, ten or pay nothing - and download music for free. The new album topped the charts and only on the first day it sold 1.2 million copies, not counting the pirated traffic . The average purchase amount, according to various estimates , was from $ 2.26 to $ 8, but in any case the group earned more money on it than on the previous album, which was distributed according to the classic fixed-price scheme.

    Since then, many other merchants have begun experimenting with the voluntary payment model and looking for a way to increase its effectiveness. University of California Scientistsconducted a study and found an option how to significantly increase the average amount of a check.

    The experiment was conducted on a huge sample (113,000 people) in a large American amusement park. After the attraction, visitors were offered to buy their photo for a fixed amount of $ 12.95 - only 0.5% of the guests agreed to part with that amount.

    When the free payment model was applied, the number of buyers increased to 8.4%, but the average purchase amount was only $ 0.92, which hardly covered the cost of printing and selling photos. Although the number of customers was very large, the profitability of the business remained minimal - perhaps, like Radiohead, this is not the best business model.

    Then the researchers decided to use the mixed method. They left the same voluntary payment model, but announced that half of the amount would be donated to charity. This dramatically changed the situation. Obviously, it became inconvenient for people to buy photos for ridiculous amounts, and the average payment grew to as much as $ 5.33, while the number of buyers remained quite high: about 4.5%.

    Interestingly, when using a fixed price of $ 12.95 with a transfer of half to charity, the number of buyers remained at the level of 0.57%. This is the scheme used by many companies in modern business. It turns out she is not working. Even eBay statistics show that if a seller begins to transfer 10% of their income to charity, then the number of buyers grows by only 2%.

    In other words, the use of the “charity” approach is only valid for voluntary payment at a price set by the buyer (according to scientists, this is because people are more sensitive to social responsibility when they see that the company is clearly risking its financial situation for charity). As a result, even after deducting half of the revenue, the company received more profit than from a sale at a fixed price. If such an approach was used in an amusement park, then it could receive $ 600 thousand more profit for the season, not to mention the tax benefits for charity.

    To make sure, the owners of the park checked the profitability of souvenir shops and other outlets on the day of the campaign - it remained unchanged, that is, the additional profit did not come at the expense of other units.

    An article with the results of the study was published in the journal Science (DOI: 10.1126 / science.1186744).

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