Thursday, March 22, 2007


The Motley Fool has an article about a cafe/deli, Terra Bite Lounge, the business model of which is not to charge a set price for anything but rather to encourage patrons to voluntarily pay what they would reasonably elsewhere. As the author points out, this is not totally unheard of - after all that's what tipping is.

As the author also points out, this type of business model/experiment is more suited for certain industries than others. Off the top of my head, I can think of a number of industries where this might do well, e.g., certain types of service industries. Anyone have any other ideas?


Maarek said...

I would think that any time your customers will want to be repeat customers would be a good candidate. A roadside dinner would have too may people who know they will never come back, and may not care if they annoy anyone. But a local shop which caters to a community would have a better chance of having this model be a success.

Ken said...

Good point. I think that that criterion would be a necessary rather than sufficient "cause". Are there any other necessary criteria? Is there any one sufficient criterion or would it require a combination of various criteria that would together be sufficient?

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