Zero Price BiasOpen Access

Zero Price Bias

We value something more when free over very cheap

A product’s price acts as a signal of its value. But without a reference point, we have to make our own conclusions, driven higher by emotion.

Shampanier, Mazar & Ariely (2007). Zero as a special price: The true value of free products. Marketing Science, 26, 742-757.

The study

Setup

243 people were split into four groups and asked about the attractiveness of one of two types of chocolate truffle at one of two prices (Hersheys at 0¢ or 1¢ or Lindt at 13¢ or 14¢).

Results

Those in the zero-priced truffle group felt disproportionately more attracted to their truffle than those in all other truffle groups.

Study graph

Key Takeaways

Replace very low cost with free.

Amazon famously rolled out free shipping in Europe, sales rose everywhere but France, where shipping was mistakenly set at 10¢. What small costs are you passing on to consumers?

In line with Prospect Theory, it may be better to bundle ‘the pain’ within a larger cost.

Takeaway image

Communicate what is free.

Consider surfacing bundled, previously hidden value that you offer, actively highlighting the zero cost in marketing material and on invoices etc.

Takeaway image

Nudge with small charges.

The flip side of zero-pricing is that incurring even a small cost quietly impacts our decisions. If you're trying to change behaviour, imposing a small discomfort can disproportionately assist.

Takeaway image
Takeaway image
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Zero Price Bias

Zero Price Bias

We value something more when free over very cheap

A product’s price acts as a signal of its value. But without a reference point, we have to make our own conclusions, driven higher by emotion.

The study

Setup

243 people were split into four groups and asked about the attractiveness of one of two types of chocolate truffle at one of two prices (Hersheys at 0¢ or 1¢ or Lindt at 13¢ or 14¢).

Results

Those in the zero-priced truffle group felt disproportionately more attracted to their truffle than those in all other truffle groups.

study graph
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