By Noah Henry • August 25, 2014
It’s a tiny industry, but an industry whose participants see a bright future in it.
The pay-what-you-want business model, or PWYW, has slowly made its way into ecommerce. Normally, the only way to negotiate for a better price is in person, whether for buying a new car, a new home, or even a new dress. But stores like Greentoe are blazing the path for a new kind of haggling—one that allows you to state your price and have it. Period.
In most businesses, products and services are perishable. That is, they expire, which is a money-sucker for companies. Businesses in the entertainment industry, for example, often see profits dwindle when tickets go unsold. Likewise, hotels and airlines see vacancies on a daily basis. Websites that adopt an auction-based system can sometimes act as the saving grace for companies in these sectors. And it’s the consumer who benefits. Here are a few websites that let you name your own price, no funny business involved.
Pay What You Want
The stroke of genius to create Greentoe came after founder Andrew Kurland was shopping on Amazon. He noticed the biggest retailers tend to have the same prices on products because they can afford to sell at the same low rates. So, Kurland thought, why can’t consumers post a price they’d be willing to pay and have these retailers compete for their business individually?
At Greentoe, you can post the price you want for TVs, appliances, cameras, musical instruments, baby products and more. Greentoe then notifies its network of stores that there is someone willing to pay a certain amount for a product they sell. If the price is within reason, the item ships from whichever retailer wants to sell.
Greentoe sells items 18 to 22 percent less than top ten retailers, and 7 to 12 percent less than Amazon. Shipping and tax is included. Greentoe doesn’t publicize the retailers in their network because the retailers don’t want to disclose that they sell for a lower price somewhere other than their website.
How can a site like Greentoe.com save you money? It’s virtual haggling. You set the price you want and with a little bit of luck, reliable sellers agree and send the item your way. Like many pioneers in the field of ecommerce, the success of Greentoe depends on the success of its users.
If you purchased a new Nikon digital camera for a price well below the price available at Best Buy, wouldn’t you consider that a success?
A seat at a live event is a perishable product. It’s a shame for everyone involved—owners, players, sponsors, vendors—when a venue fails to sell tickets. CEO of ScoreBig Adam Kanner estimates that 40 percent of the market goes unsold each year; a $25 billion industry loses $10 in potential sales.
ScoreBig takes the same auction model as Greentoe and brings it to the ticket industry. Purchasers can bid on tickets and save as much as 60 percent. The process is simple: How many tickets? Where do you want to sit? And what do you want to pay? ScoreBig will immediately notify you whether your bid is accepted or not.
The reason ScoreBig is able to sell tickets to sports, theater, and concert events cheaper than competitors is because they purchase tickets in bulk from brokers, teams, venues and other sources. This also allows them to avoid charging users for exorbitant processing and shipping fees.
Hint: Choosing general seating often yields the best deals because it gives ScoreBig the most flexibility.
What can we say about Priceline that William Shatner hasn’t already said? Like ScoreBig, they work with a network of partners who routinely have unsold inventory. (Forty percent of rooms go unused every night, per Priceline.) And since no one likes vacancies, these partners accept bids from travelers looking to score cheap deals on flights, hotels and rental cars. Jaunted published an interesting anecdote verifying Priceline’s Name Your Own Price policy, which got them a Delta flight for half the price.
People who use Priceline must be flexible when it comes to airlines and flight times; otherwise, Priceline’s partners get less flexible. Considering Priceline’s monopoly on the name-your-price travel market, they are likely the best bet when it comes to securing discounted travel options that aren’t publically displayed on deal aggregator sites such as Expedia and Travelocity.
Do you see the pay-what-you-want business model taking off in the future? And how was your experience with these websites?
Noah Henry Noah Henry is an amateur movie critic, foodie, bowler, and beer reviewer. But he's no amateur when it comes to saving money, so listen up!