Pay What You Feel: The Radical Pricing Strategy That's Redefining Value

In an age where customers are increasingly sceptical of corporate motives and pricing transparency, one pricing model stands out as both revolutionary and risky: Pay What You Feel (PWYF). Take Lentil as Anything, an Australian restaurant network that has operated entirely on PWYF principles since 2000, guided by the belief that "a good meal should be accessible to everyone regardless of their economic situation." It's a concept that strips away the traditional power dynamics of commerce and asks a deceptively simple question: What is this actually worth to you?

But beneath this seemingly straightforward approach lies a complex web of psychology, economics, and human behaviour that can make or break a business. Lentil as Anything's two-decade success with this model stems from their deep alignment between pricing flexibility and social mission—their customers aren't just buying food, they're supporting a vision of community accessibility. This illustrates what makes PWYF truly work: it reaches its potential when rooted in shared values between business and customer. Let's explore what makes PWYF tick, when it works brilliantly, and when it spectacularly doesn't.

The Psychology Behind the Price Tag

Before diving into case studies, it's worth understanding what happens in a customer's mind when faced with an open price field. Research in behavioural economics reveals several fascinating patterns:

The Anchor Effect: When businesses provide a "suggested" price, most customers cluster around this figure. Research by behavioural economists shows that removing the anchor entirely leads to much wider price variation—both higher and lower than you might expect.

Social Proof Pressure: Customers often look for cues about what others are paying. Studies in consumer psychology demonstrate that displaying average payments or payment ranges can guide behaviour without mandating it—some businesses cleverly use this to influence customer decisions.

Guilt vs. Gratitude: The emotional response varies dramatically. Consumer research reveals that some customers feel uncomfortable paying less than they perceive the "real" value to be, whilst others feel grateful for the flexibility and pay more as a thank-you.

Beyond the Obvious: Creative Applications of PWYF

There are many examples of companies who have implemented PWYF with successful results. Annalakshmi restaurants in Malaysia have operated on a "give as you wish" model for over three decades, proving the longevity possible with PWYF when aligned with strong values. Lentil as Anything in Australia built a network of community restaurants around the principle that "a good meal should be accessible to everyone regardless of their economic situation."

Humble Bundle has built an entire business model around PWYF for digital content, allowing customers to split their payment between developers, charity, and the platform itself. This model has generated millions for charity whilst proving that digital goods can thrive under flexible pricing.

Buffer (the social media management tool) once experimented with PWYF pricing for their premium features, finding that transparency about their costs actually encouraged higher payments from satisfied customers.

Some consultants and freelancers have adopted PWYF models, particularly those working with non-profits or start-ups. The key is establishing clear value first, then allowing clients to determine fair compensation based on their budget and perceived benefit.

The Dark Side: When PWYF Goes Wrong

There are however some pitfalls and examples of where PWYF has not worked well. Not all customers play fairly, and some businesses report that a significant minority consistently pays the absolute minimum (or nothing at all), effectively subsidised by more generous customers. This creates an unsustainable model unless carefully managed.

Panera Bread tried PWYF with their community cafés, where customers could pay what they felt a healthy meal was worth. Despite noble intentions, the experiment struggled with customers paying on average only 60-70% of the suggested price. The model failed not just due to scaling issues, but because many customers interpreted "pay what you feel" as "pay as little as possible." Most locations eventually closed due to financial sustainability challenges, demonstrating that without strong community ties or brand loyalty, the model can quickly devolve into a discount scheme.

PWYF also works differently across cultures, though comprehensive research on this is limited. The success often appears tied to local community values and social expectations around fairness and reciprocity.

Strategic Implementation: Making PWYF Work

PWYF is not for everyone, although it can be effective when implemented well. The model works best for three types of businesses: mission-driven organisations (like sustainable fashion brands or community cafés) where values alignment creates customer loyalty; digital platforms where marginal costs are low and community goodwill drives virality; and service providers working with varied client budgets who can establish value before discussing price.

Success typically looks like stable average payments above break-even costs, low customer drop-off rates, and positive community sentiment. Warning signs include too many customers paying minimal amounts, negative word-of-mouth about "cheapskates," or community misunderstanding of the model's purpose.

If you're thinking about PWYF, here are a few things to consider:

1. Set Clear Boundaries

• Establish minimum viable prices for essential costs

• Use suggested pricing ranges rather than complete open-endedness

• Consider hybrid models (fixed base price + optional top-up)

2. Build in Transparency

• Share your actual costs and margins

• Explain how different price points affect your ability to serve others

• Show the impact of payments (e.g., "Your £5 payment allows us to provide one meal to someone in need")

3. Create Community Connection

• PWYF works best when customers feel part of something bigger

• Foster relationships beyond transactions

• Regularly communicate the collective impact of all customers' choices

4. Monitor and Adjust

• Track not just average payments but payment distribution

• Identify patterns in customer behaviour

• Be prepared to pivot if the model isn't sustainable

Measuring Success: Beyond Revenue

Traditional metrics don't always capture PWYF success, here are a few other metrics worth considering to evaluate its worth:

• Customer Lifetime Value: PWYF customers often show higher loyalty

• Net Promoter Score: The goodwill generated can lead to powerful word-of-mouth marketing

• Brand Equity: The transparency and trust-building aspects can significantly enhance brand value

• Social Impact: For mission-driven businesses, the accessibility created may be worth the revenue uncertainty

The Future of Flexible Pricing

Several trends suggest PWYF will continue evolving:

Sustainability Focus: As environmental concerns grow, more brands are adopting PWYF to make sustainable options accessible to all income levels whilst building community around shared values.

Economic Uncertainty: During periods of economic instability, PWYF can provide businesses with loyal customers whilst offering consumers financial flexibility.

AI-Assisted Personalisation: Early-stage tools are emerging that suggest optimal pricing ranges based on user profiles and behaviour, maintaining PWYF flexibility whilst improving sustainability. Dynamic pricing algorithms could soon help businesses offer personalised "suggested" prices that feel fair to individual customers whilst protecting business margins.

The Bottom Line: Is PWYF Right for You?

PWYF isn't suitable for every business, but it can be transformative for the right ones. Consider it if:

• Your brand values align with transparency and community

• You have strong customer relationships and brand loyalty

• Your margins can absorb payment variability

• You're solving a genuine problem or providing clear value

• You can measure success beyond immediate revenue

The most successful PWYF implementations share one crucial element: they're not just about pricing—they're about building a movement. Whether it's Lentil as Anything's community accessibility mission, museum accessibility, or a local café's community spirit, PWYF works best when it's part of a larger story that customers want to support. Like Lentil as Anything's approach to inclusive dining, the pricing model becomes an extension of the organisation's values rather than just a financial transaction.

In our increasingly complex economic landscape, perhaps the radical transparency of Pay What You Feel isn't just a pricing strategy—it's a return to the fundamental human values of trust, reciprocity, and community that commerce should serve.

In the end, Pay What You Feel isn't just about letting customers choose their price—it's about choosing to trust them with that power. And in a world where trust is increasingly scarce, that choice might just be the most valuable thing you can offer.