Demand-backward pricing
Demand-backward pricing, also known as reverse pricing or pay-what-you-want pricing, is a pricing strategy where the price of a product or service is determined by the customer’s perceived value rather than the cost of production. This approach allows customers to set their own price based on how much they are willing to pay.
One example of demand-backward pricing is seen in the music industry, where artists like Radiohead have allowed fans to download their albums for free or pay whatever amount they choose. This strategy gives customers the freedom to support the artist at a price point that they feel is fair.
Another example is the restaurant industry, where some establishments have implemented pay-what-you-want pricing for certain menu items. Customers can pay what they can afford or what they believe the meal is worth, creating a more inclusive dining experience.
Overall, demand-backward pricing can be a risky strategy for businesses as it relies on the goodwill and honesty of customers. However, when implemented successfully, it can lead to increased customer loyalty, word-of-mouth marketing, and a more positive brand image.
For more information on demand-backward pricing, you can visit Wikipedia.