To quote Monty Python, "And now for something completely different."  A British band called Radiohead has released a new album called "In Rainbows".  I personally don’t know the first thing about the band, or their music.  But here’s the interesting part.  According to the Toronto Globe and Mail, since they have no contract with a record label, they’ve released "In Rainbows" themselves.  It’s only available on their web site.  You can’t buy it at Wal*Mart, or even at  The twist is that YOU decide what you’re going to pay for it.

That’s right.  You can give them a dollar, or twenty dollars.  It’s up to you.    According to some sources, the band may have made as much as $10 million on the first day the download was available.  When you consider that the band gets virtually all the money, compared to the percentage they would receive from the record label under the normal agreement, it looks like the band made a pretty good move.  Radiohead is known for its innovative music, so it’s not out of character for them to come up with an innovative marketing model.

No one’s suggesting that this would be a good model for any other business.  The band has very little cost in their product.  Once they pay any backup musicians, pay for studio time, and pay a staff to handle the distribution, their cost is nearly zero.  They don’t even have to pay for a blank CD.  We should all be so lucky.

But it does show that we’re living in a different age.  Outside-the-box thinking is definitely in order when it comes to doing business in the twenty-first century. Cost plus pricing isn’t really a viable option anymore.  Those days are over.  But what’s going to take it’s place?  The key to setting the right price is figuring out what value the customer places on a product or service.  Maybe asking them isn’t such a bad idea.  What do you think?

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