There is no ‘willingness to pay’ in journalism
— Florian Bauer on pricing strategies
He is professor of behavioral pricing at the TUM School of Management in Munich and board member at the consultancy Vocatus.
Medieninsider: Mr. Bauer, there is much debate in the media industry about whether and what customers are willing to pay for journalism. You say there is no such thing as willingness to pay. How would you frame it?
Florian Bauer: The term willingness to pay is psychologically completely misleading. Microeconomic theory assumes that people have a maximum price in mind that they are willing to pay. This would then be predefined, and companies could only react to it. But people don’t operate like that, most of them don’t know in advance what they would pay as a maximum. They have a less rational approach to prices and decide much more spontaneously, but quite predictably. That’s why we talk about price acceptance.
That sounds like an opportunity. If I want to sell something, how do I go about the pricing then?
Price acceptance is like a muscle that you can train. You constantly increase the weight you are working with. What you shouldn’t do: Lift the same weight for five years and then put on a lot more.