Pricing Lessons from Humble Bundle

What would your reaction be if you walked into Starbucks and the barista told you that you could pay whatever you wanted for your coffee? Oh, and if you wanted all the money to go to charity instead, that’d be cool, too? In addition to buying 17 carmel macchiatos with the 13 cents you found in your pocket, you’d also probably wonder who in Seattle lost their sanity. Well, that’s exactly the pricing model Humble Bundle offers.

They provide limited-time offers on bundles of video games, in which buyers set their own price, and then choose how much goes to charity. The latest bundle, simply called “The Humble Bundle for Android 2”, was released just this week. How does it work? Take a look at this video:

 

Here are some stats on their success: 2 years old, 2 million transactions, and $12.6 million raised for developers, charity, and themselves (the exact breakdown to each party isn’t made publicly available). It’s an interesting pricing model that’s likely raised a handsome sum for charity, but could it be applied to other types of products as well? Let’s take a look at what makes the Humble pricing system tick and see where that leaves us:

Humble Bundle Acts Like The Boss

When you learn that your boss at your new job doesn’t come into the office until 10:00 AM, you learn that’s OK if you don’t want to arrive until after 9:00. When he shows up in jeans, you can confidently come back to work the next day in that acid washed denim that’s been in your closet for 26 years (right?). He sets the norm; you feel better because you know what’s expected. Humble Bundle does the same thing. They start buyers off with a default split of 55% to developers, 30% to charity, and 15% to Humble Bundle. Hard to feel anxious about getting the allocation wrong, when a strong suggestion is made for you.

Humble Bundle has a unique pricing model.

A Gentle Guilt Trip

Humble Bundle does a couple smart things to encourage you to pay a legit price. First, they show real-time data for the average purchase amount. If you decide to pay less then that, they’ll remind you with a nice blue warning banner before you pay. Secondly, if you pay more than average, you actually get an extra game. It’s a slick combination of guilt and rewards to keep buyers honest.

Unusual Pricing But Standard Products

Downloading video games is becoming pretty standard. You do have Angry Birds, yes? Even though the pricing model is strange and new, everything other aspect of the promotion is standard fare. That’s important, because if potential buyers are asked to digest too many unfamiliar pieces, they’ll leave.

$0 Marginal Cost of Distribution

This one’s pretty boring, but it’s one of the most important. Downloadable digital goods cost next to nothing to distribute. Each copy sold costs about $0.00 to make and deliver. So if a user pays a mere penny, no one is any poorer for it.

Exposure for Indie Developers

It’s indie developers who submit games to these bundles – newer companies who are relatively unknown. Even if these developers don’t make much per copy sold, they still benefit from the increased exposure and gross sales. Gamers benefit, too, by being exposed to quality games they may not have discovered otherwise.

Limited time

If “set your own pricing” were available all the time, then that would customers to expect such treatment all of the time. That’s not sustainable, and it certainly won’t make developers happy. (Is there any reason why an “add your own donation” piece couldn’t stick around forever, though?)

Can Humble Bundle’s Model Work Elsewhere?

This unique pricing model is certainly an interesting marketing strategy. Could this work elsewhere? Not at Starbucks, but I think there’s plenty of ideas here that could be applied to online retail, for one. Where else do you think a Hunble-esque offering would do well? Let’s hope that Humble Bundle continues to be successful, raise gobs of money for charity, and encourages others to follow suit.

3 Ways Zynga’s CastleVille Promo Could Integrate Causes Better

Zynga, the heavy hitter in the social gaming space, announced a new cause-promotion last week for one of their new games, CastleVille. While Zynga should be commended for trying to integrate causes into its product, they haven’t pulled off the promotion as well as they could have.

Here’s how the promo works: visit the CastleVille page on Facebook and “Like” the game. Then, select one of three non-profits to whom you’d like to designate a donation from Zynga. If CastleVille reaches 5 million “Likes”, then Zynga will donate $100,000 to these causes. The non-profit with the most votes will receive $40,000, while the other two each receive $30,000.

Again, it’s great that Zynga has decided to integrate charitable support into the promotion of a new game. But they could have done a much better job on making the integration with causes more meaningful. Here are three ways they could have turned a single into a home run:

Integrate Causes With The Product

Three causes are presented for voting: clean water (via water.org), disaster relief (via Direct Relief International), and Education (via Save the Children). Try to find any relationship with the game, which is about exploring a medieval world with your friends, and you won’t find much of a connection. Not that there has to be an overt link (is there even such a think as a medieval-based non-profit?), but some attempt integrate causes more directly would have made the experience much more relevant. For example, are there characters in the game that Zynga could have associated with each non-profit? Even a loose connection would have been better than nothing at all; instead, the causes feel tacked on to the promotion, without much thought.

Provide Context

You might have expected that Zynga would have provided some further background information about the three non-profits they’ve presented. But there’s almost nothing to provide any context around these causes. For clean water, for example, all users see is a generic water icon, which turns into a water.org logo when the moused over. Users don’t need a complicated set of information to read through, but some additional background would have added some real meaning. How about a picture of the people who are being helped? Or maybe a tidbit of information about where in the world the money is being used? Taking a page from Donorschoose.org or GlobalGiving.org would have made the causes much more real.

Allow Users To Step It Up

Liking content on Facebook is a sure-fire way to allow users to show their support of something. Great. But what if someone really wants to see that $100,000 get donated? Short of spamming their friends to Like the CastleVille page, there’s not much else a cause-advocate can do. So how about allowing users to buy more Likes buy pre-purchasing virtual items in CastleVille? Or give fans a CastleVille character to use as their Facebook profile pic to drive further awareness? At the very least, Zynga could have offered users the chance to donate to those charities directly, by providing links to each non-profit’s site right on the Facebook page.

Will Zynga’s latest cause campaign obtain the 5 million Likes they’re striving for? It’s too early to say, but at the time of this writing (about a week into the promo), there were about 300,000 fans. What do you think? What are some ways Zynga could have done a better in its efforts to integrate causes into its game?