Saturday, April 25, 2009

Pay What You Can Pricing - Early Results from Sensorielle

Facing falling customer traffic due to recession, Sensorielle spa in Boulder, CO decided to go for a pay-what-you-can pricing scheme. As previously reported, they had posted fixed prices but asked their patrons to pay for the services what they value/afford. The goal was to reduce pricing as a concern for customers and to encourage their regulars to return to the Spa. Recently the owner of Sensorielle spa, Ms. Jewl Pettaway, a Boulder Net member, posted early results from her pricing experiment. Here is the full text of her posting in the Boulder Net discussion group (posted with permission).

At Sensorielle, we love our new concept, and would like to hear from clients, colleagues, and the general public about how you feel about it. Below I have expressed some of what we are experiencing.

Some clients feel guilty if they don't pay the full price. We certainly don't want that! The idea is to allow everyone to care for themselves regardless of their situation. So, if you come less because you feel like you need to pay 100%, it sort of defeats the purpose. We know this is something very new, and may be hard to swallow at first. We hope that people will get use to it and really come as much as they can and pay all they can truly afford.

Other clients have expressed a concern that we will not make it because people will take advantage. I can tell you, people taking advantage is the tiniest minority of what we are experiencing so far!

Since our launch on February 1, we have found a great balance in people coming weekly but paying a little under the suggested pricing, people coming less frequently and paying full price or more, and those paying a bare minimum. They seem to be the minority, and do not come as often for whatever reason.

Most clients we see give us a full range of "5's" on their feedback cards, and many express how grateful we are to be doing this for our community even (and especially) if they are paying full price or more. It has been really rewarding for us, the entire staff of Sensorielle, to see this idea manifest in the best possible way we could have imagined.

So far, our cash flow the is better than last year with full pricing, and our average service ticket has only gone down by about $15-$20! We estimated it would reduce by about $40. It is amazing what can happen when you launch yourself fully into a passionate idea with no research available!

What are your thoughts?

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