Conventional economic wisdom holds that the more emotionally attached we are to something — our home, a cool car, a treasured item of clothing, a beloved piece of furniture — the higher the price we seek when selling it. In fact, one of the core arguments for Realtors and against FSBOs has always been the need for a dispassionate arbiter to determine the true market value of your home, lest you keep it on the market longer than necessary by setting the price too high. But a new paper, to be published shortly in the Journal of Marketing, suggests that really liking a product you’re selling can have the opposite effect, leading many people to lower their asking price in certain situations.
If true — and I find the research pretty convincing — the ramifications extend not only to home sellers and eBay merchants but to businesses as well.
In their paper, marketing professors Aaron Brough and Mathew Isaac detail four studies that test an interesting hypothesis: “that due to concern for how products are used following a transaction, strongly attached sellers may be more willing than weakly attached sellers to provide discounts to potential buyers whose usage intentions are deemed appropriate.”
In other words, the researchers suspected that we prefer to sell a beloved possession to someone who is likely to use it in a way we approve — and that we are actually willing to sell it for less to ensure it ends up in the right hands.
The theory proved to be correct. While not everyone becomes attached to everything they own, those who do have an attachment to an object will happily take less money when selling if it means the new owner will use it in a way they like.
In one study, for example, participants were asked to choose between would-be buyers of a piano described as a family heirloom. Offering prices were randomly staggered, but in all pairings it was explained that one buyer wanted the piano to actually be played, while the other wanted it to decorate a room. Brough and Isaac’s theory was that when offering prices were equal, participants would prefer selling to the buyer whose usage intent was to play the piano. And they were right; 89% of sellers preferred that buyer over the home decorator. More interesting, though, was the willingness of sellers to take less money — an average of $680 less than the average sale price of $5,000 — to make sure the piano went to someone who would play it.
The hypothesis also held up outside laboratory conditions. In another experiment, the researchers contacted 179 car sellers on “a popular e-commerce site.” All sellers were in the same metro area, and all had in the previous 24 hours listed a car with an asking price between $2,000 and $3,000. But some sellers were professional dealers, while others were individuals selling just the one car. The e-mail was a simple inquiry about the seller’s willingness to provide a 15% discount.
(MORE: An Election of Lesser Evils)
But some e-mails explained that the buyer wanted to restore the car, while others indicated that the usage intent was to scrap the car for parts. Brough and Isaac theorized that personal sellers would respond to the discount offer more readily than professional sellers when the car would be restored rather than used for parts. Once again, they were on target. For example, more than 2 1/2 times as many personal sellers (43%) refused to offer a discount when the purpose was to scrap the car as did those who thought the purpose was restoration (17%). Put another way, 83% of personal sellers were willing to give the discount if the buyer was going to restore the car, while only 57% agreed if the usage intent was to scrap it for parts. (Among professional sellers, the effect of usage intent was negligible.)
Brough and Isaac, who were management consultants before pursuing academic careers, spend a chunk of their paper discussing practical implications of their work. They suggest, for instance, that marketers aiming to lure people into buying new product iterations by encouraging trade-ins of earlier models would generate higher rates of participation if consumers believed their old models were being used for something other than scrap — say, as donations to the less fortunate or to charitable organizations. (They also suggest Uncle Sam could have done a better job getting people to participate in its Cash for Clunkers campaign a few years back.)
On the flip side, there’s an obvious lesson for buyers of used goods, at least when negotiating with nonprofessionals: while you can’t know for sure if a seller is emotionally attached to a given item — whether a pair of shoes or a three-bedroom colonial — it can’t hurt to assume that he or she is and make clear that your purpose is to use the product in a way that any caring or concerned soon-to-be-former owner might appreciate.
It might very well result in a nice discount.