Kunzum Cafe explores participative pricing strategy

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Tucked away in the rusty, designer by-lanes of picturesque Hauz Khas Village in Delhi sits Kunzum Cafe, a cosy cafe with tasteful interiors.  Far removed from the scores of cafes thronging the capital city, with a similar look, ambience, and menu, Kunzum Cafe has been able to hold its own, with its one-of-a-kind proposition, which is an unconventional pay-as-you-wish pricing route for its customers.

Positioned as a pay-as-you-like travel cafe, Kunzum Cafe was started by travel writer, photographer, and former journalist, Ajay Jain in 2010 and remains perhaps the only such hub for travel enthusiasts.

Even before the cafe was launched, brand Kunzum has been around since 2007, when Jain started a travel blog with the same name, derived from Kunzum Pass in the Lahaul-Spiti valley in Himachal Pradesh. It has also been extended into a publishing label with books on travel and an online travel magazine. Being an avid photographer, Jain wanted a place where he could showcase his work as well as build a brand that would bring together people with such like-mind creative pursuits.

This is how Kunzum cafe was born. In Jain’s words, it is a ‘face to face book of travel’ where people can swap travel stories, plan travel trips, and meet fellow enthusiasts over cups of coffee.

Talk, eat, drink and leave
Apart from serving as a brand which caters to all aspects to travelling, the pay as you wish concept has got people talking. The brew and cookies (the only items on the menu) are on the house, and visitors are free to pay what they desire.

Ajay Jain, Founder, Kunzum Cafe

Ajay Jain, Founder, Kunzum Cafe

Explaining the rationale behind this novelty, Jain says, “We wanted it to be a place where the ownership rests with the company and did not want any entry barriers for anyone coming in.”

While such a move certainly arouses customers’ interest and drives more curious visitors to the cafe, how is this business model sustained? Surprisingly, according to Jain, this idea has actually paid off for him, and whatever amount people pay willingly is enough to sustain the running costs of the place. It also helps that the cafe requires very basic finances owing to the limited menu and the team from Kunzum’s other operations double up as cafe managers.

In fact, as a marketing principle, this strategy is similar to the concept of participative pricing, wherein the consumer plays a crucial role in the pricing decisions. This not only avoids disadvantages associated with conventional pricing but also creates a friendly exchange between the buyer and the seller. This mostly happens in a competitive market place.

This probably explains why Jain wants to continue with this winning formula and has plans of neither making it a paid menu nor expanding its menu offerings, despite the temptations coming his way. “We are not in the F&B business. We want people to focus on travel, talks, and the creative stuff that we do around photography, films, and music. They can go for food anywhere, but they can’t go anywhere else for all of this,” he explains.

An ‘experiential’ cafe
The cafe houses Jain’s photographs, the books he has authored along with a huge library of travel books, magazines, and pictorial catalogues for visitors to browse through. The cosy ambience gets an added personalised touch with a pin-up board on which guests leave scraps of memories from their travel sojourns.

The cafe, which on an average, sees a daily footfall of 100 people also organises various events like film screenings, music gigs, book launches, travel talks, poetry sessions and photography workshops to increase visitors as well as ensure a regular stream of revenue. Such activities attract a certain kind of a consumer profile which is in line with the cafe’s intended target audience. According to Jain, the visitor profile broadly includes creative, independent professionals, expats, foreigners as well as students, though the latter contributes only 15 per cent of the cafe’s footfall.

One of its prime marketing mediums has been the digital platform. Kunzum has a vibrant community on Facebook, Twitter, and Pinterest, which helps to connect with consumers as well as spread word about the various events.

However, more than anything else, what has worked the most for the cafe is word of mouth advertising. “A majority of people who walk in, say that they have heard about it from a friend,” says Jain.

Recently, Club Kunzum has also been launched, which is a paid membership club that organises activities like heritage walks, food walks, and travel tours. Jain targets a member base of 1,000 people by the year-end from the 100 members at present.

Launched almost two years back, Kunzum, rather than fading away into relative obscurity, still manages to arouse the curiosity of people. Jain has plans of replicating the successful venture in other places and is looking at opening Kunzum cafes in Gurgaon, Bengaluru, Ahmedabad, Pune, Chennai,and Kolkata, with his first priority being Gurgaon and Bangalore. However, he candidly admits that a new cafe would require an overhead of at least Rs 2-3 lakh a month, and will have higher running costs than those of the existing cafe. To raise money for this expansion, Jain is looking at revenues through workshops, advertising, and sponsorships as well as renting out the cafe space to select travel partners to offer some travel services.

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