Despite the widespread inflation of coffee and espresso prices, most of us would be totally fine with paying significantly more for our morning cup of joe. That is the conclusion of a new study from the Munich University of Applied Sciences, where neurobiologists have determined that certain prices make much more sense to us than others. The findings suggest that coffee giants like Starbucks may be missing out on millions in profits.
"Everyone thinks that they've truly figured out how to sell a relatively inexpensive product for a lot of money," lead author Kai-Markus Müller said, speaking to Der Spiegel. "But the odd thing is that even this company doesn't understand it."
The odd critique of corporate strategy is described by the authors as the first of its kind. In an experiment, volunteers were shown a sequence of different prices affixed to the same cup of coffee. As the subjects viewed the slides, the research team used a technique known as electroencephalography (EEG) to monitor activity in a certain brain region associated with proportionality.
According to Müller, this particular brain region controls a neuronal process whereby external stimuli are recognized as harmonious or dissonant. For example, whereas coffee and cake makes perfect sense, coffee and ketchup results in momentary confusion and internal disagreement. The logic, it turns out, applies in consumer contexts.
"When the brain was expected to process unexpected and disproportionate prices, feelings of shock, doubt and astonishment manifested themselves," Müller explained.
Although most people were okay with paying the usual $2.45 for a small Starbucks coffee, many displayed a “preference” for significantly higher prices. The findings indicated that nearly all participants would be willing to pay between $3 and $3.30 for the same cup of coffee.
"In other words, the company is missing out on millions in profits, because it is not fully exploiting consumers' willingness to pay money," Müller told reporters.
While few are worrying about the financial well being of a corporation that grossed around $13 billion in 2012, the new study nonetheless illuminates an intriguing aspect of the human mind. Its findings suggest that the quid pro quo model that drives all human business is hardwired in our brain and that such proportionality can persist even in the face of reason. In other words, a price can seem just right, even though it’s clearly too high.