You pay however much you are ready to pay. Traditionally if you price a ware 100$, you'll lose all the money from those who can only afford 10$, and if you price it 10$, you lose all the extra money from those who would have paid 100$.

With Kickstarter, some people pay 10$, some 100$ and some 1000$, and they are all very happy about that.

This is achieved by: Giving nice perks for extra money; Buyers understanding that by paying less they only steal from themself.

That's not that uncommon a pricing model in the arts even pre-Kickstarter. You've got the $10 CD, the $25 limited-edition CD with bonus tracks, the $100 super-limited leatherbound box set signed by the artist, etc.

I'll argue the incentive is different for goods that already exist.

Also kickstarter takes this to a radical new level with tens of price tiers compared to two or three.

But don't the different "tiers" generally offer different products (or multiple products, special goodies, etc)? If you just want the basic watch, you aren't free to "pay whatever you want to pay" -- you have to pay the asking price, just like everyone else.

That's the beauty of it.