Fundraisers in animal masks greeted me at the Old Oak / Durban Road traffic lights today. They are asking for donations to support an anti-drug campaign. What was interesting about their approach is that the masked collector that came to my window only asked for 5 cents. Their poster said the same thing, “five cents makes a difference”. This is a peculiar strategy, but quite a smart one.

I’ve seen it work for the Funny Money pamphlet sellers outside Cavendish Square. The pamphlets are paid for by the printers so the sellers can ask minimal amounts because they have no costs to cover. There’s a smart psychological trick in asking for a ridiculously small amount. I think people derive pleasure from trumping the requested amount. When he asks for 5 cents and you give 2 rand, you almost feel proud of surpassing expectations. If he had asked you for 2 rand from the start, you may not enjoy complying or you may simply have refuse. I think it’s a good idea to give others the opportunity to impress you because they’ll end up putting in more money-effort.

It’s this idea that I believe Trent Reznor did not understand when he released Saul Williams’ Niggy Tardust album. They made the album available for free download but provided the option of paying $5 for a higher quality download. Reznor was disheartened when he discovered that 154 449 people downloaded it for free but only 28 322 were willing to pay the $5. The mistake he made was setting a specific amount instead of letting donators pick it themselves. If he had to set a minimum amount he should have made it ridiculously small, like 5 cents. Doing an internet transaction is still a hurdle for a lot of people. But if you have to pay 5 cents anyway, you might end up donating more to surpass expectations.

P.S. I’m sure there must be some research on this topic in psychology or behavioral economics, but I have not encountered it yet. If you know more about this or have seen this strategy used elsewhere, please let me know.