Writing for Kellogg Insight, Dylan Walsh reports this month on some fascinating new research by Jake Teeny, Anna Paley, Robert Smith, and Daniel Zane. Teeny and his colleagues examined the relationship between willingness-to-pay and the level of enjoyment a seller derives from creating a product. Walsh summarizes the findings:
As a whole, the studies showed that buyers actually associated production enjoyment with greater product quality and value, consequently increasing how much they were willing to pay for it. And yet sellers often charged less for the products and services that they enjoy providing, even though they also believed them to be of higher quality.
The scholars argue that potential buyers seem willing to pay more for products when they believe that sellers have experienced high levels of intrinsic motivation while creating the products. In other words, if the seller valued the process of creating the product as much, if not more, than the good itself, then buyers seem willing to pay a higher price for the product. On the other hand, they argue that sellers price the product with their own enjoyment in mind. If you are performing an unenjoyable task, you might charge more for a particular service. If you are doing something very enjoyable, you may perceive some of your "compensation" has come in the form of that satisfaction and pride. As a result, you may not expect as high of a price for the product from the buyers.
What does this mean for sellers? Think carefully about showing your customer how much effort and passion has gone into the creation of a good or service. You might just command a higher price as a result. And sellers... not shortchange yourself when placing a value on something you loved creating.
Does this research have lessons for employees in larger organizations? Perhaps it does. Do we demand less monetary compensation if we truly love our job? Are we shortchanging ourselves in these situations?
