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Show your costs to boost sales

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Re: Show your costs to boost sales

#81

Post by pydry »

Frost1x wrote: post #77
pydry wrote: post #40

Earlier quoted context omitted.

Luxury brand wallet owners feel much the same way about their wallets that you do about your iPhone.

>I suspect many consumers wouldn't like to know that the $1500 iPhone they just bought only has $400 worth of actual parts in. This is neglecting software development, maintenance, new features rolled out, etc. Yes, you're overpaying beyond cost, Apple would go out of business if you weren't. The question is are you overpaying for the functionality or value you get out of the product/service and are the margins too f…

>In the case of a designer wallet or velben goods in general, you're really paying for the status and symbolism in the inflated margins. This may be true of some iPhone owners.

Or indeed, most.

Apple is hardly shy about marketing itself as a purveyor of luxury goods.

Re: Show your costs to boost sales

#82

Post by PedroBatista »

I'd like to see how this actually plays out in real life, aka. people buying instead of saying they would buy.

Also, for "regular" physical goods it's more or less easy to do the cost break down in a clear way, but what about services and software?

Re: Show your costs to boost sales

#83

Post by jkestner »

jrwoodruff wrote: post #36

This seems like a great marketing technique for up starts trying to compete in the quality/price space. In the chicken soup example, for instance, cost to produce is a strong indicator that the soup has quality ingredients, and isn't just a big markup on some generic condensed soup. It's a similar thing with the backpack, but in the other direction - this price isn't low because we cheaped out on manufacturing and ma…

Upstarts, perhaps. Startups, I wonder if seeing that the $50 gadget costs $60 to make will have a positive impact. It may signal that the cost is being subsidized by investors (and the business may disappear) or by selling your data. But I'm all for transparency to make better decisions.

Re: Show your costs to boost sales

#84

Post by AlwaysRock »

cody3222 wrote: post #4

"People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown." What people say they would do and what they actually do are 2 very different things. The conversion rate of actual behavior needs to be tested for this to mean something useful.

Sure. You could call pretty much all research into question using this argument. A huge amount of research is done based on questionnaires.

Re: Show your costs to boost sales

#85

Post by ssharp »

I've done substantial amounts of a/b testing and experimentation around ecommerce pricing and it's pretty rare for a maxim like "show your costs to boost sales" to hold to in either 1) the long run or 2) across multiple product types, audience types, brands etc.

Especially with something relatively novel like this, results are very prone to bias since novelty has the tendency to increase purchase-intent in the short-term.

As far as audience, I'd say the audiences of folks interested in a $115 wallet, Harvard students, Everlane/J Crew shoppers, and craft cocoa buyers are on the more affluent and/or intelligent side, which may compound the novelty effect or at least have the transparency resonate more.

Re: Show your costs to boost sales

#86

Post by tuukkah »

giu wrote: post #13
cody3222 wrote: post #4

"People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown." What people say they would do and what they actually do are 2 very different things. The conversion rate of actual behavior needs to be tested for this to mean something useful.

Good point! Sadly, I don't have access to the Harvard study ( https://pubsonline.informs.org/doi/10.1287/mksc.2019.1200 ), so maybe someone with access to it could check it, but the linked article might be misleading in some aspects (depending on the results of the study shown in the paper). From the study's abstract: > A preregistered field experiment indicated that diners were 21.1% more likely to buy a bowl of chi…

Here's open access to the full study: http://ssrn.com/abstract=2498174

Re: Show your costs to boost sales

#87

Post by pushrax »

rahimnathwani wrote: post #79
tdmckinlay wrote: post #47

Earlier quoted context omitted.

Thank you so much! I agree that the figures can vary for many reasons and we shouldn't expect them to be exactly the same (some things we don't end up controlling for). At the same time, if we take the experiment of the soup for example: They measured 9,227 sales of it so the 21.1% increase is quite robust and I'd expect the error margin to be much lower than 5% either way - so in some ways the precision is warranted…

"if I were to round a 21.4% to 20%" Right, but you'd round 21.4% to 21%, not to 20%.

Or ideally keep 21.4% and include the 95% CI. There’s nothing misleading about the extra precision when the CI is included.

Re: Show your costs to boost sales

#90

Post by shoto_io »

bachmeier wrote: post #68
shoto_io wrote: post #39

Earlier quoted context omitted.

Hi Thomas, thanks for your work. I am a fan! Just a minor comment: I find using decimals places (like 16.1% and 21.1%) in human experiments pretty irritating. It feels like false precision. After all, these experiments must have confidence intervals. If I had to guess, I’d assume at least a +/- 5 ppts variability in all these numbers. What’s your view on that?

> I find using decimals places (like 16.1% and 21.1%) in human experiments pretty irritating. It feels like false precision. Whether you say 21.1%, 21%, or 20%, you still have a single number. You could make an argument that decimal places like 21.147258% add clutter, but without an actual measure of uncertainty, all you're doing is reporting a summary of the data in the sample with different amounts of arbitrary rou…

21.1% is implying a different confidence interval than 21%. At least to me.
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