You are out for a Sunday bike ride on your favorite biking path, and you come across a pair of kids selling lemonade. Do you stop and buy some lemonade? Do you like the lemonade? Does your buying or liking the lemonade have anything to do with the wording on the sign next to the lemonade stand? Apparently so.
Cassie Mogilner and Jennifer Aaker from the Stanford Graduate School of Business conducted a series of experiments to see whether references to time or references to money would affect whether people stop to buy, how much people are willing to pay, and how satisfied people are with the products they buy. They conducted 5 experiments. The first one was the lemonade stand described above:
Sometimes there was a sign that said, “Spend a little time, and enjoy C & D’s lemonade.” This was the “time” condition. Sometimes the sign said, “Spend a little money, and enjoy C & D’s lemonade.” (money condition) and then there was a control condition where the sign said, “Enjoy C & D’s lemonade”.
391 people passed by either walking or on bikes. Those who stopped to purchase lemonade ranged in age from 14-50 years old, and there was a mix of gender, occupations etc. Customers could pay anywhere between $1 and $3 for a cup of lemonade — they could decide the price. The authors comment that the high price was justified by the fact that the customers got to keep the high quality plastic cup. (Ok, excuse me if I date myself here and comment that when I had a lemonade stand as a kid I think we charged like 10 cents). After customers drank their lemonade they also completed a survey.
More people stopped to buy lemonade when the sign mentioned time (14%), in fact twice as many people stopped when time was mentioned than when money was mentioned (7%). In addition, customers in the time condition paid more money for the lemonade (on average $2.50) compared to the money condition (on average $1.38). Interestingly, the control condition was in between on both # of people stopping to purchase and the average price. In other words, mentioning time brought the most customers and the most money, mentioning money brought the least customers and the least money, and mentioning neither was in between. The same effect was true when customers filled out the satisfaction survey.
Does time = personal connection? – The researchers came up with the hypothesis that when you invoke time in the message you make more of a personal connection than when you invoke money. To test this idea out, they conducted 4 more experiments in the lab rather than in the “field” to see how the time vs. money messaging affected people’s ideas about purchasing iPods, laptops, jeans, and cars.
Personal connection = time = experiences… well, mostly, but not always – At the end of all the experiments, the researchers concluded that people are more willing to buy, spend more money, and like their purchases better if there is a feeling of personal connection. Most of the time that feeling of personal connection is triggered by references to time instead of money. The idea is that mentioning time highlights the experience you are having with the product, and it is this thinking about experiences that makes the personal connection.
But not for prestige products or “materialists” – For certain products, such as designer jeans or prestige cars, and/or for certain consumers – those who value possessions more than experiences – personal connection is highlighted by mentioning money more than by mentioning time. These people are in the minority, but they are out there.
So where does this leave us? Here are the take-aways as I see them:
a) The best thing to do is, of course, know your market/audience. If they are people who are influenced by prestige and possessions, then by all means mention money.
b) Be aware, though that most people, most of the time, will be more influenced by time/experiences as the personal connection rather than money or possessions.
c) If you don’t have time or budget to know your audience well, and if you are selling non-prestige items or services, then err on the side of time/experiences, and delay the mention of money as long as possible.
What do you think the take-aways are?
And for those of you who like to read the research:
Mogilner, Cassie and Jennifer Aaker (2009) “The Time versus Money Effect: Shifting Product Attitudes and Decisions through Personal Connection,” Journal of Consumer Research, 36 (August), 277-291.
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7 Replies to “100 Things You Should Know About People: #42 — We'll spend more money if you don't mention money”
Mention money, but just to set a price in the customer’s head, then show them that the REAL price is much cheaper. If the late-night infomercials do it, it must work…
Interesting post. With the speed of technology and modern life in general, time has become extremely important. It seems that consumers want to save time in doing the mundane to make time for things that are precious to them. This time saving has never been more apparent than in gadgets/machinery consumers purchase and in shopping online.
I have really enjoyed most of the insights shared in this blog, but this one throws me a bit. “Spending time” to me, has a positive connotation – especially when associated with something I enjoy. “Spending money” has a negative connotation, even when associated with something I enjoy. So it seems very intuitive to me that the experiment went the way it did. To me a fair comparison, I’d propose pitting a “spend time” message against a discount/promotional message, which is a money-themed message with a positive ring. Does that make sense?
Susan, thanks so much for this post! I really appreciate you boiling down the science of the experiment for us. I will definitely be percolating over how to apply this information in my business.
After I read this post, I was peeling a cucumber in my kitchen and I realized, when I get calls from prospective new customers, I don’t usually talk about the price of my service until the very, very, very end.
First we talk about their situation for a long time and I answer their questions. Sometimes the price almost feels like an afterthought. This has led to some awkward moments when people realize after talking to me for quite some time that my price won’t work for them, and then I feel somewhat foolish for talking to them for so long.
But this makes me feel like what I’ve been doing all along is actually okay. Phew!!
Anyway, I look forward to reading more of your blog!
Good article!!!. I work at a company in Brazil that sells tech trainings. We are in doubt just about that, mention or not mention about the training costs. We do not have a answer yet. We did some research at USA schools and, almost everyone, does mention about their prices. Once again, nice post!!!
So now I remember why I was talking about the vegetable peeler. Before the great salesman Joseph Ades died, I had the great pleasure of seeing him hawk his swiss vegetable peelers on the street in Brooklyn. As he used his peeler to effortlessly mandoline potatoes, seamlessly skin cucumbers, and carve carrot flowers in a flash, he didn’t say anything about how much the peeler cost. Never in my life have I yearned so much to shout, “But how much IS it?????!!!” After reeling dozens in with his great salesmanship, when he gave the price at the end as $5, I bought two – and I still wish I had bought more! If you want to see him in action, here’s a great little clip of his schpiel: http://www.youtube.com/watch?v=NGOjFhKeLiU&feature=related
I wonder if these results are affected by the study being between something representative (money) and something that is not representative (time).