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Permalink Reply by Mike Spence on February 2, 2009 at 10:14am

I believe there is a shop in Kirkland wa that tried this - an ex-google guy I think. I'm pretty sure I remember reading that he made some sort of profit as well. Cafe Terra Bite.

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Permalink Reply by Chris Hooton on February 2, 2009 at 4:16pm

http://seattletimes.nwsource.com/html/businesstechnology/2003558690... interesting, thanks for the info Mike!

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Permalink Reply by Mark on February 3, 2009 at 2:38pm

I can't speak to the specifics on this case, but in general I would say this is a failing strategy from a business perspective.
1) It's not likely to bring new customers to your establishment.
2) It's likely to reduce revenue from current customers. Will anyone actually overpay vs normal price? No.
3) It's also likely to diminish the perception of your establishment. Customers will view prices as lower end, and with that comes lower end quality perception.

Now you could make it a winning strategy, but it's very difficult. You would need to ensure quality perception stays (or make it) high...also would need to consider drink sales a wash and a way to just sell other items (sandwiches etc) where you make your real profit.

If anything in these times, you should raise prices. I know, crazy...but you want to solidify in your customers minds that you are not just buying coffee or espresso...but something they can not get anywhere else. If it's cheap, they will begin to lose that special feeling and might even cut this small expense from their spending.

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Permalink Reply by Tougo Coffee on February 18, 2009 at 9:22am

http://www.yelp.com/biz/terra-bite-lounge-kirkland

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Permalink Reply by Mark on February 18, 2009 at 1:46pm

Apparently they have stopped the "Pay what you want", as my original post has come true. In bad economic times, people will stop paying for goods they seem as expendable or not worth it. Thus, the reverse should be your strategy, to enhance the value of what you provide so the customers do not cut you out. Now, I suggested raising the prices as one option. I mean this just to show that raising prices would be better option then cutting them (or eliminating them altogether). I am not suggesting this should be done as the best strategy. The focus needs to show consumers the true value of what you provide...that it's just not coffee or espresso drinks...but an experience, a ritual, that they just can not do without.

Tougo Coffee said:

http://www.yelp.com/biz/terra-bite-lounge-kirkland

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