Encourage Customers to Pay What’s Right

At the top of the window of Der Wiener Deewan in Vienna, Austria is printed “All You Can Eat.” Look to the right and see above the entry door “Pay As You Wish.” This restaurant was the site for a pricing study by researchers from University of California-San Diego, University of California-Berkeley, University of Amsterdam, and Friedrich Schiller University. What they found might puzzle you at first, as it did me.
     One group of customers were asked, before paying, to announce how much they’d pay for the meal. Another group were to pay secretly. In this group, the researchers didn’t know how much each person paid, only that a meal was purchased and what total amount was collected from all the purchasers together.
     Which group paid more on average? Think about that for a moment, choose your answer, and then read on.
     The researchers say the inspiration for the study was their interest in which was a stronger influence in a consumer deciding how much to pay for an item—concern about how he looks to his peers or concern about what he thinks of himself.
     The researchers found that the average price was higher for those purchasers who paid secretly. It appears that self-image was more important than public image.
     I’d guessed it would be higher among those who announced the purchase price publically. The outcome puzzled me until I heard about results from another study done by these researchers: People who were photographed riding a rollercoaster were invited to purchase the photo. All the people were told the regular price was $15. Then the prospects got one of three offers. Some were offered the photo at the regular price of $15. A second group was offered the photo for $5. A third group was invited to set their own price.
     Here, people were more likely to purchase the photo when the price was quoted as $5 instead of $15. Consumers love a bargain. That result is expected. But the surprise was with the group invited to set their own price. Those consumers were the least likely to buy the photo.
     The consumers were uncomfortable at the thought of appearing cheap both to others and to themselves, so without the anchor of $5 as okay to pay, the “quote your own” group preferred not to buy at all.
     Help customers by giving them guidelines to pay what’s right.

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Serve the Underserved 
Anchor Browsers onto Higher Prices