In a recent study by Harvard University, it was found that consumer brains work very differently when exposed to the product before the price rather than the other way around. In the experiment, participants saw 3 images: ‘price’, ‘product’, and ‘price + product’. The order of ‘price’ and ‘product’ was continuously switched, so that sometimes the participant would see the price first, and other times he would see the product first, and then the price.
The aim of the experiment was to uncover the influence on showing/hiding the price on willingness-to-pay and purchase behavior. Particularly, the researchers examined the medial pre-frontal cortex, where decision value is estimated, and found that the neural patterns in this area differed greatly depending on the order of ‘price’ and ‘product’. When the price was introduced first, the participants would focus on whether they thought the product was worth it: that is, whether the price was fair for such a product and whether it would be a wise purchase.
On the contrary, when the product was shown first, the participant would start to consider whether he actually liked the product: that is, what utility will he get from buying the product and does it satisfy his needs?
One takeaway from this study is the bargain-hunting nature that is embedded within many consumers. Sometimes they will make a purchase solely because it’s too good to pass up! However, when the price is shown after the product this tendency is not as evident.
What Does this Mean for My Business?
The key takeaway from the study is this: If you’re competing on price, showing your price tag before the product works best. However, willingness-to-pay was generally higher for products when the product was showed first!
Of course, you will not always be in a position to decide whether your customer sees your price tag or your product first: but when you are, it will most likely be in your interest to focus primarily on your product, and introduce your price at a later stage. On your website, you can make sure visitors will have to visit your product page before they can move on to the pricing page. In your advertising, you can make your price tag less visible and attention-grabbing. If you’re selling your products in a store, try to put the price tag out of sight: for instance, if the price tag is stuck onto your product, place it so it faces the back of the shelf.
Make sure your customer evaluates your product - not your price!