This increasingly popular retail strategy has one huge problem

Everlane

 Everlane has been advertising a bizarre sale — one in which consumers could choose from three prices.

Buy the highest price, and Everlane would get a good chunk of money to fuel its continual growth and pay its employees. Buy the middle price, and Everlane would get a small slice. Buy the lowest price, and Everlane would get nothing.

This sort of sale creates a bit of a moral quandary, and now, New York Magazine's Science of Us reports that the internal dilemma that comes with these sales actually creates an even bigger problem for the business: often times, Science of Us notes, when given the opportunity to chose, people don't end up buying things at all.

Everlane

The Science of Us's Melissa Dahl points to several studies from the Proceedings of the National Academy of Sciences (2012) to elucidate this conclusion, including one in which group of people on a boat who had their photo taken, and some of whom were instructed to pay a discounted price ($5, originally $15) for the photos, and some had the option to pay what they wanted. Those who had the option to pay whatever they wanted bought fewer than those who had been given a named price. Dahl also points to a study where people at a buffet were instructed to pay what they felt was appropriate, some anonymously, and some in person. Dahl says that those who paid anonymously paid more than those who paid in person, potentially because they felt their own sense of self worth were at stake.

Ultimately, Dahl highlights something Business Insider brought up on Monday — the inherent shame that comes with selecting the lowest price (although we posited that Everlane might profit from this experiment).

She quotes Ayelet Geezy of UCSD who wrote the initial study: "When people believe that the ‘right’ price is high, they simply prefer to forego the opportunity to buy the product … rather than to appear cheap by paying too little ... When someone is willing to pay little but cares about maintaining a positive self-image, the best option is to not buy at all." 

Everlane

Everlane's CEO, Michael Preysman, appears to be content with the decision to execute this sort of sale.

He spoke with Buzzfeed regarding the sale, and said that this form of a sale would explicate to consumers how sales work (when things are on sale...the company doesn't profit). "We’ve literally never put anything on the site on sale," Preysman said to Buzzfeed. "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."

"There’s quite a bit of psychology on how you explain this, and how people click through on it,” he said to Buzzfeed. “We tried to simplify the concept as much as possible."

He also believes that if he's up front with consumers, they'll be kind in return.

"It’s the affinity … If you’re honest and transparent with people, then they’ll sort of treat you with decency in return," he said to Buzzfeed.

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