Delayed Price Disclosure Influences Consumer Purchase Decisions

Retailers who delay revealing product prices can influence consumer purchasing decisions, according to new research. This practice, often seen in online shopping, can lead shoppers to imagine prices before they are displayed. The study suggests that this delay can be beneficial for retailers, particularly when consumers anticipate high prices.

Minzhe Xu, an assistant professor of marketing at Iowa State University's Ivy College of Business, and his team conducted this research. They found that when shoppers expect a product or store to be expensive, a delayed price reveal can increase sales. Consumers tend to imagine a higher price when no number is immediately visible. When the actual price is then revealed and is lower than their imagined figure, the product appears to be a better deal.

One field test involved Frávega, an Argentine retailer. The company temporarily concealed prices on certain items during a period of high inflation. Sales of these items, such as espresso machines and kettles, increased. Researchers attributed this to shoppers expecting higher prices due to the economic climate. The actual prices then seemed like a pleasant surprise.

However, this effect reverses when shoppers expect a bargain. If consumers anticipate a low price, delayed disclosure can lead them to imagine an even lower figure. When the actual price is revealed, even if it is still low, it may not meet their amplified expectations, causing a decrease in interest. The study also noted that explaining the reason for a price delay, such as a "minimum advertised price" policy, can reduce consumer interest regardless of the actual price.

The findings, published in the Journal of Consumer Research, indicate that price beliefs are significant. These beliefs are shaped by factors like brand reputation, store environment, product category, and economic conditions. Delayed price disclosure amplifies these existing price beliefs rather than creating new ones. Retailers must understand their audience's price expectations when deciding whether to delay price displays.

This research challenges the idea that frictionless shopping is always optimal for retailers. Adding a slight delay in price disclosure can be a strategic choice. The study concludes that an "add to cart to see price" button is not merely a design element; it actively shapes consumer expectations and can impact purchasing behavior.