Two guys named Dan Provost and Tom Gerhardt announced their second project on Kickstarter after their successful Glif-project. Glif, a simple accessory for the iPhone 4 was a huge success on the Kickstarter, a crowdfunding platform, where it raised $137 417 from 5273 backers. Their new project, the Cosmonaut, is a wide-grip stylus pen for touch screen devices.
This project too, has attracted immense interest in a couple of weeks. However, the more interesting part of all this is the experiment the gentlemen did with a pay what you want pricing concept. Backers of The Cosmonaut could choose whatever amount the wanted, but there were only 3000 slots available and they needed to raise $50 000 to go ahead with the project. Dan Provost recently published a blog post explaining what people pledged when they were given the freedom to choose what they wanted to pay for the product.
This is a great example of game theory in practice and what people ultimately pledge the project with. With the 3000 spots, they managed to fund approximately 90% of the funding goal in less than 48 hours. This meant they had $44 631 after just two days.
The average amount backers supported the project with was $14.87. Which was of course below the $16.67 they needed on average to fund the project. Below is a graph showing the dollar distribution of the project. Most of the money was made by people pledging the right amount in the $16-20 gap.
However, when we look at the amount of pledges in different groups we can see that the majority of the people tried to take advantage of the situation and pledged below the needed amount. However, it’s also worthwhile stating that quite a few people supported the project with relatively high sums above the required average of $16.67.
The full post and the comments people left to the project page can be read from Dan Provost’s blog post, but it does seem to confirm relatively well that people do seem responsible when they’re given the option to choose what they want to pay. Naturally, this is just one view into the funding of the project and it would have to be known how many people pledged for the previous project as well, by the gents.
Finally, while you probably can’t take away anything concrete from this to your own pricing models – it does show that there are immense possibilities in coming up with interesting pricing alternatives. Personally I believe business model innovation is one of the most underused areas of innovation with startups these days.