Everlane's CEO Explains The Logic Of Its "Choose Your Price" Sale
The online retailer is offloading excess inventory in a novel way. Are some customers willing to pay more than the lowest possible price?
Everlane / Via everlane.com
Everlane, like many retailers, is holding a big sale right now to get rid of excess merchandise, from shoes to sweaters. But in a twist, the online-only clothier is letting consumers pick from one of three prices on each item, betting that some people won't go for the lowest one.
Each item that's part of the "Choose Your Price" sale displays three discounted prices. On a $75 sweater, for example, the discounted prices are $32, $39, or $68. The cheapest price covers Everlane's production and shipping costs, while the second goes a step further, covering that plus "overhead for our 70-person team." The highest price, which is only $7 less than the sweater's original price, includes all of that and also allows Everlane to "invest in growth." ("Thanks!" the description adds.)
Everlane founder and CEO Michael Preysman told BuzzFeed News that the sale drew inspiration from Radiohead and the Metropolitan Museum of Art. Radiohead, in 2007, successfully allowed fans to pay whatever they wanted to download its new album, while the Met technically only charges a "recommended" admission fee that people tend to pay.
"We've literally never put anything on the site on sale," said Preysman, who launched Everlane four years ago. "Everlane's obviously for profit, so for most people, we were trying to explain how sales work and how we think about them, and maybe for those with a stronger affinity, they may have wanted to contribute in a way beyond that."
Everlane / Via everlane.com
The promotion began this weekend and will run through Thursday, Dec. 31.
This reporter was skeptical of how many people would choose to pay something other than the lowest price. After all, consumers are value-hungry these days — and paying the highest price doesn't give you anything tangible. Like, you know, a keychain, or a pin, or a future discount.
But Preysman said that in a small test of existing customers about a week ago, roughly 10% of people chose either the middle or highest price points.
"If I had to guess, because we haven't selected it this way, they might have bought two things at the lowest price and one thing at a mid-price," he said.
Preysman said he was more involved than he would normally be in the promotion's presentation and limiting the sale prices to three distinct choices. The company also considered making it a "name your price" sale, but that got too confusing, he says.
"There's quite a bit of psychology on how you explain this, and how people click through on it," he said. "We tried to simplify the concept as much as possible."
As for why someone would pay more than the lowest price, he said: "It's the affinity ... If you're honest and transparent with people, then they'll sort of treat you with decency in return."