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Question to Everyone: Setting aside the technical meaning, does Donationware...

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40hz:
The big problem with these models isn't so much an issue of definitions as psychology.

PayWhatYouWant and Donation(fill in the blank) are basically trying to create a relationship between the developer and the customer.

Despite many people saying they want a "more personal relationship" when making a transaction, what most are really looking for is a Master/Servant arrangement. In short, they want the supplier to know about all their little whims and fancies. With the implied understanding the developer will use this information to anticipate their future needs and develop new products accordingly.

They are seldom interested in getting to know the developer if it brings any additional obligations (i.e. patience, understanding, forgiveness, saying thank you, paying a bill promptly, etc.) with it.

So relationships are double-edged affairs.

To be fair, many businesses and organizations know and exploit this. You're less likely to complain about the incompetent server you got in a restaurant if she first introduced herself by name. ("Hi! We're so glad you could join us this evening. I'm Jennifer and I'll be your server this evening!) because it's one thing to complain to the manager about a server. But quite another to complain about Jennifer totally screwing up your entire order. Or even tip her less than you normally would a far better server. Because youve been introduced so it's not like you don't know her.

After being burned on several faux relationships when conducting a transaction, many people have become reluctant to enter into them. Especially if they're spending money.

I'm sort of like that. I'll actively enter into a relationship with someone if the product or service is such that I'll be partnering with the supplier. But that implies a complex product where there'll be back and forth and ongoing involvement. For off-the-shelf stuff I don't see the necessity. I just want to pay the man what he asks and be on my way. What I do not want is to go into business with the guy by helping him decide what he should be charging. If he has no idea what his work is worth how can I possibly know?

One other problem comes when you ask somebody to: "give me a number." Most anybody who has negotiated anything soon learns that the person who first names his/her price is immediately put at a disadvantage. So most people have a reluctance to be the first to name a price. That's why:

"We suggest $10 as a reasonable price for what you'll be getting - but feel free to pay whatever you think is appropriate. We accept payments in any amount."

will likely get a better response than;

 "Pay whatever you like!"

(Note: the first offer will also net you exactly $10 - no more, no less - almost every time someone takes you up on it.)

And For those developers who like to look at pricing as a game - or try to make it into one - may I make a humble suggestion?

Never play games with pricing.

The old-time huckster trick of naming an outrageous starting figure: "Price is $500, but pay as much, or as little, as you want - we accept all offers. Even if it's only one dollar." does nothing but damage your credibility. Even if the opening price is not completely outrageous (say something like $50 for a nice utility app) there are many who will walk away because they can't afford it and are either (a) embarrassed about it - or (b) feel guilty offering less than what you're asking. Either way, you've lost a customer. And you'll often end up looking like a jerk in the process.

Ok.  Now let me qualify what I've been saying just a bit.

I'm an American. Born and raised in an old-style New England "work ethic" family - with all that implies. And I'm not alone despite repeated attempts to discover a cure.  ;)

My upbringing and cultural conditioning has taught me that negotiating prices beyond a brief (and largely token) back and forth is undignified. And haggling is downright distasteful. Not because negotiating is beneath me. But out of respect for the seller and myself.

The seller is presumed to be competent and honest (why talk to him otherwise?) who is asking a fair price for what he is offering. I, for my part, am a gentleman who willingly pays fair price for value received. And if I can't afford (or am unwilling to see as fair) the asking price - I do without. Doing with less (or without) is a old New England tradition anyway.

The only reason I bring this up is because I think it's important to look at the cultural ramifications when coming up with licensing and price models. There's a tendency among those of us in the tech world to view humanity (or at least the part of it that uses computers) as a monoculture. It's not. And any licensing or pricing model is going to have to be aware of that if it hopes to be successful.

 :)

Paul Keith:
That's true but I think the idea has to be narrower. The problem or rather attempt of answering the question comes not just from the intent of psychology but the psychology of systems as well as the psychology of words.

The problem with psychology alone is that you have to head towards more of a design perspective. That's problematic as the idea about monoculture does not only bring forth the problem of how cultures interpret such models but how the cultures really are.

Example, in some cultures, a color means something else. The psychology has to tackle this but this is more the task of your user interface/packaging/campaign designer.

A psychology of systems on the other hand breeds forth ideas closer to conceptual frameworks and I think that's the heart of narrowing it into a much simpler question. To expand upon our perceptions of how to better the framework within each of our opinions especially in light of new views by other people.

It would be better if only I knew the official terms to describe the value of asking such a question beyond it's role as a question.

...how could I put it, umm...the question isn't basically about a relationship between the developer and the customer.

It doesn't mean that the issue doesn't exist but umm... if someone was engineering a software model, they wouldn't deal with the part about designing for the relationship between the developer and the customer at all and would instead deal with the relationship of organizing the concepts in such a manner that the new concept that comes away from it would deliver an entirely new product/mindset to the programmer/designer/seller in such a way that they can be more direct about the product to the customer rather than trying to continually rebuild relationships with them. (I'm not a software engineer so I'm being very careful with throwing this out but I couldn't avoid bringing this up what with the direction of the topic)

Some clear examples of this from a hardware perspectives are:

-Steve Jobs unveiling a thintop out of an envelope. You can make that sound better but the system behind the concept has already done most of your work

-Ipads + App Store: Many can decry how it's such a poor idea and how flawed tablets are but the combination has not only created a new platform (thanks to the new non-Apple users who demand rather than ask for the supply to be demanded) but the App Store has brought forth demand for an entirely different subset of portable games even thouigh it's not a true portable games platform nor is it a true laptop especially when games leads to other more powerful yet simple cloud based appware.

-For software, when mouser released a micro-credit forum hybrid, it shook the foundations of who are the ones that can be considered most contributing to the forum. The concept of micro-credit/micro-payments therefore did more to forward the demand/psychology of donationware than any relationship a customer has with donationware nor any programmer's desire to not only do donationware but offer it up here on this specific forum. Yet this doesn't mean it killed relationships nor made DC a monopoly for where you place your donationware. It simply meant that it changed the landscape due to the simple change in perception thanks to a modified framework leading to a modified manner of executing a concept which in turn modified the other parts in the clog of what eventually becomes the product that the customer has to have a relationship with, along with attempts to connect this relationship to the developers.

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