Case Study Lessons: Do ‘Pay-What-You-Want’ Memberships Work?

Best practices in pricing psychology strongly suggest that for-profit sites avoid “tip jar” payment models — you know, those NPR-like appeals to help support a

Best practices in pricing psychology strongly suggest that for-profit sites avoid “tip jar” payment models — you know, those NPR-like appeals to help support a blog or favorite site. But this week’s Case Study on CellarTracker is making us re-evaluate that advice.CellarTracker is an interactive database for wine enthusiasts that lets users track their wine inventory, as well as upload tasting notes, browse other wine reviews and estimate the value of their collection. Founder Eric LeVine started the site in 2003 as a hobby for his own passion, and today CellarTracker has between 55,000 – 60,000 unique visits a day and more than 300,000 registered users.However, in lieu of a mandatory annual subscription price, LeVine has implemented a “voluntary payment” option:

This is a risky approach, but one that has paid off for CellarTracker to the tune of more than $1 million in revenue a year. Our Case Study analyzes CellarTracker’s funnel and conversion rates and determined that the site’s success comes down to the following reasons:

CellarTracker gives users a recommended subscription price instead of a “tip jar” asking for whatever users want to donate. This is a bit like a “suggested donation” at a museum — there’s an implicit social contract and subsequent guilt when someone knows s/he can pay the suggested rate but doesn’t.
CellarTracker is a membership and database where free members can upload their inventory and tasting notes. This is a consumer variant on what in B2B is called “workflow integration,” where the user effectively becomes dependent on your service, and discontinuing your service would mean a wrenching change and disruption.

That second reason is probably the most critical one — and the reason a straight content delivery site (i.e., news, magazines, industry publications) would not see success with this model.What do you think? Is there a good example of a straight content delivery site where voluntary payments worked? Or do you know of any membership sites relying on user-generated content that made this sort of model work? Let us know by commenting below.CORRECTION: An earlier version of this story incorrectly stated that CellarTracker had 40,000 – 50,000 unique visits a month. The correct figure is 55,000-60,000 unique visits a day.