4-18-23

Should you be more transparent? Maybe so...

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What's Happening

Apple launches Apple Card’s savings accounts with 4.15% interest rate
Montana Moves to Ban TikTok Entirely in the State
A new Drake x The Weeknd track just blew up — but it’s an AI fake

Does Showing Costs Increase Sales?

Radical transparency is on the rise.Companies who practice it publicly share all sorts of metrics and information about their business (e.g. monthly revenue, employee satisfaction). But does this benefit sales?A Harvard and University of San Francisco study seems to think so.Here's the deal (according to the study):

In experiments...

People were 19% more likely to say they would buy a $115 wallet when it was accompanied by an infographic showing its costs
Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1% when costs were disclosed (see image below).
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.

For the effect to work, the cost disclosure must be voluntary, not forced (e.g. by regulation). The effect was tested and held in experiments when profit margins were as low as 17% and as high as 55%.So, why does this work?Well, according to the study...When a company discloses its product costs we trust them more, which in turn makes us like them more and more willing to buy from them.Dive deeper into companies using this tactic and why you should consider it.

Today's Challenge

If you're interested in price transparency, here are a few steps you can implement:

Make an analysis of your product’s total costs (including an estimated cost per item of your fixed costs).
Present the information in a simple-to-understand infographic alongside the product (e.g. on the price tag, on your website).
If there are many individual costs (more than 5-6), try to group them so the information is presented in a simple manner and isn’t overwhelming.

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