Zero price effect

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The zero price effect is a psychological effect in sales psychology and behavioral economics that says that a customer is more willing to buy something if he receives something for free , even if it is only minimally cheaper. Here, the customer can also be willing to spend more on a product just to save the price for another service (for example, by eliminating the postage fee for an online order). The phenomenon was first investigated by Ariely, Shampanier and Manzar in a study and published in Zero as a Special Price: The True Value of Free Products, Marketing Science 26 in 2007.

The experiment

Ariely, Shampanier and Manzar offered their potential buyers two pieces of chocolate to choose from. One of these was one from the Hershey Company with low quality and one from Lindt & Sprüngli with high quality. Then two price pairs with two scenarios were formed.

In the first scenario, both products cost money (Hershey = 1 cent, Lindt = 14 cents). 8% opted for Hershey, 30% for Lindt and 62% decided against chocolate. In the second scenario, the price for the Hershey chocolate was dropped and the price for the Lindt chocolate was reduced to 13 cents. 31% opted for Hershey chocolate, 13% for Lindt, and the remaining 56 did without chocolate. A minimal change meant that many of the participants changed brands and accepted poorer quality. It was concluded from this that consumers in principle have a higher preference for free goods.

Application examples and importance in business

In electronic commerce this can be, for example, free shipping or collecting redeemable points. This effect is also used in other industries in the form of free fringe benefits. From an economic point of view, a price of a part of an offer that is zero leads to a disproportionate increase in demand for the core offer.

In The zero-price effect in freemium business models: The moderating effects of free mentality and price-quality inference by Thomas Nobody, Robert Mai and Sascha Kraus, the zero price effect was examined using a subscription to the video streaming service Netflix . A clear zero price effect was observed for the free option when contrasted with a slightly more expensive option.

literature

  • Stefanie Jung, Peter Krebs: The contract negotiation: Tactical, strategic and legal elements. Springer-Verlag, 2016, ISBN 9783658112042 , p. 426 ff.
  • Daniel Rettig, Jochen Mai: I think, so I'm crazy: Why we often behave differently than we want. Deutscher Taschenbuch Verlag, Munich 2012, ISBN 9783423416726 , p. 115 ff.
  • Sae Schatz, Mark Hoffman: Advances in Cross-Cultural Decision Making: Proceedings of the AHFE 2016 International Conference on Cross-Cultural Decision Making (CCDM). July 27–31 2016, Walt Disney World®, Florida, USA, Springer, ISBN 9783319416366 , p. 115 ff.
  • Thomas Nobody, Robert Mai, Sascha Kraus: The zero-price effect in freemium business models: The moderating effects of free mentality and price-quality inference. In: Psychology & Marketing . Volume 36, No. 8, 2019, ISSN  1520-6793 , pp. 773-790, doi: 10.1002 / mar.21211

Individual evidence

  1. ^ A b c Stefanie Jung, Peter Krebs: The contract negotiation: Tactical, strategic and legal elements . Springer-Verlag, 2016, ISBN 978-3-658-11204-2 ( google.de [accessed on February 20, 2018]).
  2. ↑ Sales psychology : Put on photos and more red in the background . In: The time . January 11, 2014, ISSN  0044-2070 ( zeit.de [accessed February 20, 2018]).
  3. ^ Thomas Nobody, Robert Mai, Sascha Kraus: The zero-price effect in freemium business models: The moderating effects of free mentality and price-quality inference . In: Psychology & Marketing . tape 36 , no. 8 , 2019, ISSN  1520-6793 , p. 773-790 , doi : 10.1002 / mar.21211 ( wiley.com [accessed August 12, 2019]).