Research

Are You Too Rich to Wait in Line?


Are You Too Rich to Wait in Line?

Photograph by Daly and Newton/Getty Images

Money buys a lot of things, but patience isn’t one of them, according to a recent study out of Columbia Business School.

Specifically, researchers found a customer’s willingness to wait is negatively correlated with price sensitivity. In other words, someone who doesn’t give a hoot how much he pays for a slab of wild halibut reeled from the icy depths of the Gulf of Alaska is more likely to bolt if the checkout line gets long.

This has huge implications for people who set prices. For example, lowering prices to drive demand for one item can spoil sales for high-profit products if the promotion draws too many buyers.

Play that dynamic out further, and suddenly it make sense (at least in theory) for some retailers to raise prices at busy times. For example, a deli that charges more during lunch hour would draw hungry hordes earlier or later. Meanwhile it would collect higher margins from spendthrift customers that otherwise would have avoided the place because of a long queue (that is, if customers didn’t nix the place entirely on principle).

The study also found most customers care primarily about how long a line is and pay little attention to how fast it moves. A “moderate increase” in a line at the deli is as harmful to sales as a 5 percent price increase, according to researchers.

If Apple (AAPL) is really serious about winning affluent customers, it will split up its checkout lines the next time it has a hot product.

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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