Seattle Coffeeshop Relies on the Honor System

A new coffeehouse in suburban Seattle is banking on the honesty of its patrons. There are no cashiers, no set prices, not even suggested prices. You pay what you want. The money goes into a slot of a cash box; no one knows what you pay or if you pay at all. It isn't charity, the owner says, just a different way of doing business.

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ROBERT SIEGEL, host:

It may sound naive, but a new coffee house in suburban Seattle is based on the premise that people are honest and will do the right thing when it comes to money.

NPR's Wendy Kaufman explains.

WENDY KAUFMAN: When you order a cappuccino, a latte or anything else at the Terabyte Café in downtown Kirkland, something rather strange happens. There's no request for money, no set prices, not even suggested ones on the blackboard menu. Here, says Irving Paris, who created the café, what you pay or even if you pay is entirely up to you.

Mr. IRVING CAFÉ (Terabyte Café): Terabyte has based its business on people's notion of wanting to be good, and not just being seen as good, because not only is the payment voluntary, the payment is kind of pretty semi-anonymous. So it's really a very personal thing.

KAUFMAN: The idea, says the entrepreneur, whose day job is in high tech, is to create a more relaxed and trusting environment. But make no mistake, this is not a charity, just a different way of doing business.

There's no cash register here, just a small metal box with what looks like a mail slot sitting on the counter. A discrete sign says payment and tips here, but it would be easy enough to miss.

Mr. PARIS: That's it. I think it cost me $12.95 on the Internet.

(Soundbite of knocking)

Mr. PARIS: You know, it's not that solid. If someone really wanted to rip it off the wall and run out with it, they probably could.

KAUFMAN: What if I come in and all I have in my wallet is a $50 bill.

Mr. PARIS: Well, you can just cover it next time. If you have a credit card, we will run a credit card, or you can go online and pay.

KAUFMAN: The café is in an upscale, high-density neighborhood of condos, retail, restaurants and high tech. Google's Seattle office is just a couple of blocks away. The café's magazine rack holds the publications Wired and The Economist, and a huge Xbox console sits in front of a black leather coach.

Mr. ALEX SKINNER(ph): It's a nice, new place. It's close, convenient.

KAUFMAN: Alex Skinner is already a regular here. He likes the pay what you want or when you want philosophy.

Mr. SKINNER: I usually just do a weekly thing where I buy a cup of coffee each day, and then I pop in a $20 at the end of the week, and that's just fine, yeah.

KAUFMAN: While most customers are putting money in the box, owner Paris says they are paying a little bit less than they would at a traditional café, and thus one has to wonder about the viability of this approach. The pay what you want idea is not new, of course, and Wharton marketing professor Peter Fader says it hasn't worked very well in the past.

Mr. PETER FADER (Wharton University): Businesses don't want their customers to think about pricing. In a situation like this, they're putting us front and center, and that's not so good.

KAUFMAN: Fader says the absence of stated prices actually makes people uneasy.

Mr. FADER: Should I pay more or less than I paid last time? What about the person next to me? What happens if I want to get that item, too? You spend more time thinking about pricing, just about the overall experience.

KAUFMAN: He adds that Starbucks, the king of coffeehouses, has done a great job of all but obscuring price, and think how far they've come.

Wendy Kaufman, NPR News, Seattle.

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