Science & Research

Will Companies One Day Use Brain Waves to Find Ideal Pricing?


Will Companies One Day Use Brain Waves to Find Ideal Pricing?

Photograph by George Mattel/Photo Researchers

You’re not paying enough for your coffee. That’s according to Kai-Markus Müller, a German neuroscientist who has developed a way to measure brain waves and hit upon feel-good prices. Judging by neuro-images, he told Spiegel Online International, Germans would happily pay $3.25 for a small cup of Starbucks (SBUX) coffee, 33 percent more than the current price of $2.44. If he’s right, Starbucks is missing out on a whole lot of profit.

Müller previously worked for the consulting firm Simon-Kucher & Partners, helping companies determine optimal pricing for their products. But, he says, “classic market research doesn’t work correctly,” adding that research subjects can’t always be trusted to honestly state how much they’d be willing to pay for something.

Neurological scans are harder to fool. There’s a region in our brains that monitors proportionality. When proportions are drastically off—for example, when a cup of coffee costs 10¢ or $100—this region sets off an alarm. “When the brain was expected to process unexpected and disproportionate prices, feelings of shock, doubt, and astonishment manifested themselves,” Müller told Spiegel.

In Müller’s Starbucks study, an undisclosed number of subjects were shown several images of the same cup of coffee, each paired with a different price tag. Subjects’ brain waves were being recorded via electroencephalography, or EEG, and indicated when the price was right.

In a follow-up experiment, Müller teamed with scientists at the Munich University of Applied Sciences and installed a caffeine vending machine that dispensed coffee for 70¢, cappuccinos for 80¢, and then left students to their own devices to pick an appropriate price for macchiatos. After several weeks the macchiato price leveled off at 95¢, according to Spiegel. When Müller performed his neuro-pricing lab experiment, he found that subjects’ brain waves also indicated 95¢ as the ideal price for the vending-machine macchiato. An exact match.

These days scientists are developing all sorts of brain wave–based gadgets. There are headphones that supposedly use sensors to detect emotional state, then choose songs that fit the mood. There’s also Good Times, an app being developed to sense your state of concentration and block incoming calls when you’re deep in thought. And several big companies are already spending millions on neuromarketing.

Müller’s company, the Neuromarketing Labs, advertises not only NeuroPricing, but also NeuroBranding, NeuroPackaging, and more. The site does not list any clients, and it doesn’t include pricing for its various services—but if all goes well, customers will pay no less than they deem reasonable.

Cwinter
Winter is a reporter for Bloomberg Businessweek in New York.

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