A German scientist claims to have figured out a better way for companies to determine how much to price the products they sell — reading brain waves.
Kai-Markus Müller, who used to worked for Simon, Kucher and Partners, a consulting firm specializing in pricing, came to the conclusion that traditional methods for determining how much consumers were willing to pay for a product were inadequate since people didn't always answer honestly when asked how much they would pay for a given product.
According to Der Spiegel, Mr. Müller concluded that brain waves are the answer. Using EEG equipment, he showed test subjects the same pot of Starbucks coffee on a screen with various price points, all the while plotting their brain activity. What he discovered was that in Germany, at least, Starbucks could actually charge higher prices for its drinks.
"The company is missing out on millions in profits, because it is not fully exploiting consumers' willingness to pay money," he told Der Spiegel.
(Meanwhile Starbucks is defending itself against charges of profiteering in China.)
In a follow-up experiment, Mr. Müller and scientists at the Munich University of Applied Sciences installed a vending machine that sold coffee for 70 cents, cappuccinos for 80 cents, and left it up to students to determine what to pay for macchiatos. After a few weeks, the price leveled off at 95 cents. What was particularly interesting is that when Mr. Müller performed the experiment, a la the Starbucks test, the price that activated test subjects' brains was also 95 cents.
How likely is EEG testing to become commonplace for companies looking to determine how to price their products?