Why your website should not display prices

Value For Money paper note on a cork notice boardHow much would you pay for some advice on how to improve your website and get more business as a result? Let me know – because I’m willing to provide that advice for whatever you are prepared to pay.

That’s a bold move, you might think.

And I am sitting here a little scared because I could face a barrage of calls from people offering what I might consider to be a very low fee.

But I should not worry. I should be thankful that I have been so “brave”.

Research shows that when people are asked to pay whatever they think an item is worth they almost always offer more money than the price at which the business would have sold the item. In other words, businesses often set prices on the basis of fear. They are fearful that people will refuse to pay, saying it is too expensive. Or they are frightened that competitors will under-cut them. But consistent research shows these fears are groundless. When you do not provide a price, people offer you more money than you expected.

However, a new set of studies shows an interesting twist to this. This research shows that people pay even more if they are paying for another customer.

Here’s how it works in a coffee shop, for example. You order a coffee and then just as you are about to pay you are told that someone else has paid for you. You are then invited to return the compliment by offering to pay for a subsequent customer. Of course you have no idea what the next customer wants to order – they may only want a small tea, but you don’t want to appear stingy and pay for the lowest priced item, so you over-compensate and give enough money to cover a coffee and a muffin. The next person arrives, orders a small tea and hey presto the coffee shop is in profit.

Online this could work easily. When you put something into the shopping cart you could be told that a previous customer offered to pay for that item for you and so it is now free of charge to you. Then you are invited to make a donation for a subsequent customer. You don’t want to seem rude or stingy and so you donate a sum that shows you are kind and generous. If you display prices, though, people will just end up donating the amount they would have paid anyway, removing the benefit of the guilt people might feel or the generosity they wish to display.

So, one way you could increase your sales is to remove all prices from your website and ask people to pay whatever they want.

I await your call.

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