Show your costs to boost sales • Hacker News Board

Re: Show your costs to boost sales

#101

Post by yuliyp » Thu, Apr 29, 2021, 3:34 PM UTC

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…

It's not just a number. It's a string of characters conveying information about a measured value. The way it's specified conveys information about the number of significant figures (https://en.wikipedia.org/wiki/Significant_figures).

Re: Show your costs to boost sales

#102

Post by infogulch » Thu, Apr 29, 2021, 3:38 PM UTC

jkestner wrote: post #83

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.

Well then the presence of a cost breakdown becomes a selling point. If the price of your product is unusually low compared to your competitors that openly display their costs and you don't, maybe that would raise some (deserved) suspicion that something else is going on.

Re: Show your costs to boost sales

#103

Post by xgulfie » Thu, Apr 29, 2021, 3:41 PM UTC

ssharp wrote: post #85

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-…

Yeah, seeing the cost breakdown for luxury goods like this feels totally different than for seeing one for other things, like a bottle of Coke or a handmade good from Etsy.

Re: Show your costs to boost sales

#104

Post by smeyer » Thu, Apr 29, 2021, 3:43 PM UTC

Wassimo wrote: post #46

tdmckinlay wrote: post #31

Earlier quoted context omitted.

Author of the summary here: You are right regarding the chocolate bar experiment. That's why the researchers ran multiple experiments, some of which measured actual behavior: - People were 16.1% more likely to bid for a gift card for an Everlane backpack (vs a J.Crew one) when they saw cost information about it - Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1% when costs were di…

Chicken Nood Soup bowls for $4.95? Don't they usually sell for a buck at the grocery store? Unless it's a high end brand.

Most of the cost was labor, according to the picture in the article. I don't know which dining hall or cafe the "canteen" they're referring to is, but much of the food sold on Harvard's campus is produced by unionized dining hall staff with decent pay, hours, and benefits, which affects the costs.

Re: Show your costs to boost sales

#105

Post by Gustomaximus » Thu, Apr 29, 2021, 3:45 PM UTC

In a more business sense, Id say this is a mixed bag.

I have some clients I'm extremely open with about team and jobs costs. Usually more experienced people who know we're all here to make a dollar, know a good job isn't the cheapest, know everything looks simpler before you actually do it. Generally operate on my preferred methodology of 'everyone be reasonable'.

With some people, not always but often more junior, I limit detail. Some people want to micro manage quote breakdown pricing, question and screw down individual costs to the bone. Or use your details to improve their job plan and go to the next vendor and see if they can get it a bit cheaper. Etc. So when you know these people or feels like it will be, as few lines as possible is best.

Re: Show your costs to boost sales

#106

Post by johnsmith4739 » Thu, Apr 29, 2021, 3:47 PM UTC

CodeWriter23 wrote: post #96

tdmckinlay wrote: post #31

Earlier quoted context omitted.

Author of the summary here: You are right regarding the chocolate bar experiment. That's why the researchers ran multiple experiments, some of which measured actual behavior: - People were 16.1% more likely to bid for a gift card for an Everlane backpack (vs a J.Crew one) when they saw cost information about it - Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1% when costs were di…

It's kind of lazy of you to disclose the Backpack and Chicken Soup cases in a declarative way. You present no references, no drill-down on whether all other effects were equal in these cases. For example, did chicken soup sales continue for an extended period of time and were not driven by other factors such as "a cold going around" or low temperatures? Trust is certainly a factor in consumer behavior, but it nowhere…

Sorry for the downvotes you get, it's appalling. The whole piece is superficial and riddled with inconsistencies. I guess we can take it as entertainment? It's what non-marketers think a growth marketer does, just put in text form. I'm not here to make friends, but if you state that you got 21% increase, you better show the work. In a world where everybody lies, you better have proof.

Re: Show your costs to boost sales

#107

Post by EricE » Thu, Apr 29, 2021, 3:48 PM UTC

pydry wrote: post #81

Frost1x wrote: post #77

Earlier quoted context omitted.

>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.

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

And why would they?

Should they instead market themselves as a purveyor of shit goods? Sounds like a sure fire way to increase sales /s

Re: Show your costs to boost sales

#108

Post by yunohn » Thu, Apr 29, 2021, 3:49 PM UTC

tdmckinlay wrote: post #34

yunohn wrote: post #9

Earlier quoted context omitted.

Exactly this. Plus, I didn’t see “profit” mentioned anywhere in the costs, and the article also touches upon the (mostly obvious) fact that for high margin goods this would impact them negatively.

The effect was tested on profit margins as low as 17% and as high as 55%. Outside those ranges it's unclear if it will still work.

I understand, so maybe my critique was a bit of my personal views.

Rather I meant that it’s a bit odd that costs are clearly specified, but the consumer has to calculate the profit themselves. In my mind, that actually makes it less transparent as high profit margins are what drive the crazy capitalist market we have today, and associating small values to material and labor doesn’t make me feel better when the profit is the “artificial” portion of my purchase price.

Re: Show your costs to boost sales

#109

Post by johnsmith4739 » Thu, Apr 29, 2021, 3:50 PM UTC

chiefofgxbxl wrote: post #93

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.

Is there an official name for this sort of effect? I've been looking for something to call this. For example, we've had this effect at work when trying to organize social outings; people say they're interested in some activity X (e.g. hiking, board games, etc.), but then the day of that event comes and nobody shows up. The bar is very low to say you're interested in something, but doing actually takes effort.

Social Conformity - it would be costly for the participants to say no, from a social standpoint, but when the wallets have to open, there is always an excuse.

Re: Show your costs to boost sales

#110

Post by EricE » Thu, Apr 29, 2021, 3:51 PM UTC

HeyLaughingBoy wrote: post #67

londons_explore wrote: post #30

Earlier quoted context omitted.

Yes, but will you be the one to explain that cost accounting to each buyer? "Yes Maaam, we'll spend $200 of the money you're about to give us on a fancy campus with hammocks to try to attract good engineers. Oh, and the massive billboard outside that made you walk into the shop in the first place."

TBH, I've consistently found that "average people" have a better intuitive understanding of costs/profit than the average engineer. That may sound strange, at least it does to me, but I've noticed it for as long as I've been in this profession.

Yes - I was listening to a tech podcast and they thought that Apple earned 20% on the accessories and products from other companies that they sell in the physical Apple stores.

It was cringeworthy.