Meal kit maker seeks to scale ‘pay what you want’ pricing strategy
Meal kits appear to be experiencing a resurgence at the present moment and one startup in Georgia is meeting demand while offering those who would not normally be able to afford the product an opportunity to buy it.
Atlanta-based meal kit meal delivery startup Plateful.ly operates on a “pay what you want” pricing strategy, according to an 11 Alive news report. Online customers ordering a meal kit are prompted to pay a suggested price, but can pay whatever they see fit, be it more or less than the suggestion. The move is meant to allow those living with job insecurity to get the product and allow those in more stable financial situations to make up the difference. The founders of the startup say they have found the model to be sustainable and are now looking to expand their reach.
A few years ago, investors had big expectations for major meal kit startups like Blue Apron. They began backing away, however, as the space showed a high level of subscription churn and startups demonstrated difficulty maintaining profitability.
Then, early in the pandemic, restaurant closures forced consumers to eat at home exclusively and explore new creative cooking solutions, giving meal kits a new boost.
Meal kit startup HelloFresh, for instance, saw 122.6 percent year-over-year revenue growth in Q2 of 2020, according to Verdict Food Service.
Iterations of the “pay what you want” pricing strategy, while not seen frequently, have appeared before both in retail and other verticals.
In apparel, retailer Everlane runs a yearly “Choose What You Pay” sale on overstock items that provides customers with information on the expense of producing the item and how it might be priced in a retail environment, then offers three prices to choose from. A 2016 Reddit thread, however, accuses the retailer of being deceptive in how it presents the pricing.
One of the most well-known examples of the model happened in the music world. In 2007, Radiohead made its then-new album In Rainbows available as a digital download and allowed customers to pay whatever they wanted for it. The offering did not appear to impact sales of the physical album when it was later released.
- Meal kit business in Atlanta offers ‘pay what you wish’ concept – 11 Alive
- Is the coronavirus pandemic sparking a meal kits comeback – RetailWire
- The meal kit industry boomed in 2020 and will continue to thrive beyond the pandemic – Verdict Food Service
- Everlane’s “Choose What You Pay” Sale Is Full Of Things You Want Right Now – Forbes
- Everlane Choose What You Pay Scam 🙁 – Reddit
- The ‘In Rainbows’ Experiment: Did It Work? – NPR
DISCUSSION QUESTIONS: Do you see a “pay what you want” model having a benefit for meal kit brands and other companies? What are the prospects of a payment model like this scaling and continuing to build good will and profitable sales?