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In this episode of Lehigh University’s College of Business ilLUminate podcast, we are talking with Danny Zane about his recent research exploring how production enjoyment — how much a seller enjoys making a product or providing a service — influences buyers' willingness to pay and sellers' willingness to charge in online, peer-to-peer marketplaces like Etsy.

Zane, who specializes in consumer psychology, was recently promoted to associate professor of marketing. The podcast focuses on a recent study Zane coauthored with Anna Paley and Robert W. Smith, both of Tilburg School of Economics and Management at Tilburg University in the Netherlands, and Jacob D. Teeny of Kellogg Graduate School of Management at Northwestern University.

Zane spoke with Jack Croft, host of the ilLUminate podcast. Listen to the podcast here and subscribe and download Lehigh Business on Apple Podcasts or wherever you get your podcasts.

Below is an edited excerpt from that conversation. Read the complete podcast transcript [PDF]. 

Jack Croft: So cutting to the chase here, your research found an interesting contradiction or asymmetry in the way that buyers and sellers respond to production enjoyment. And generally speaking, buyers are willing to pay more money for goods or services when they know the seller enjoys producing them. But sellers actually charge less for products and services they enjoy producing. … What accounts for the difference between the way the buyers and the sellers look at that?

Danny Zane: It was incredibly interesting to see how the same information — how much a seller enjoys the production process — influence buyers and sellers in complete opposite directions. And if you look through the academic literature in marketing, or I think really even sort of in the marketplace, there aren't really many other marketplace cues out there that have been shown to have such a contrasting effect on the two parties involved in a transaction.

I'll just break down each side to highlight and explain this difference. So starting with buyers, we, as you mentioned, find that when a seller talks about how much they really enjoy producing a product or providing a service, the buyer then interprets that as a signal of a high-quality offering. And in turn, they're willing to pay more for what they believe to be a high-quality offering.

So a buyer is willing to pay more for that jewelry on Etsy when that seller who is both making and then selling that jewelry says they really enjoyed making it because the buyer believes it's higher quality.

And buyers infer high quality from high production enjoyment for a number of reasons that we get into. But just to give you one here, high production enjoyment might signal to a buyer that the seller was in a “flow state” or "in the zone" when they were making the item, which is actually sort of a technical term meaning that they maxed out their ability to really meet the demands of that task.

On the seller side, that same high production enjoyment, it actually, like you mentioned, leads them to charge less for the products or services they enjoy producing, which is fascinating. And so even though their high enjoyment of producing a good might also signal to that seller that it's a high-quality item that they're making, we know that sellers incorporate a broader range of factors beyond just the product's quality when they're making their pricing decisions.

So in this case, it's likely that their enjoyment of this production process actually provides inherent utility to them. Basically, they feel like they need less financial compensation because they've already gathered inherent value from the enjoyable production process itself.So that seller on Etsy producing and selling that jewelry feels the need to charge less for that jewelry that they really enjoy sitting there and crafting, probably because it feels less like work, it's inherently satisfying to do, and so on.

Croft: You conducted a number of different kinds of experiments to arrive at the findings in your study. I'm wondering if you could just kind of pull the curtain back a little and share some examples of the kinds of experiments that you did that led you to the findings you were just talking about.

Zane: All in all, we have over 10 experiments that document these findings. I'll highlight just a few that I find most interesting. … In a really interesting field study that we ran, we actually used Facebook's advertising feature to randomly show small business owners one of two real advertisements for someone's search engine optimization service.

One of the ads described this provider of search engine optimization services to have a lot of experience. And the other ad described the provider to also have a lot of experience, but then also mentioned that they enjoyed doing their work.

And the ad that mentioned that the seller enjoys search engine optimization yielded an incredible 40% higher click-through rate. So not only does high production enjoyment actually increase how much buyers are willing to pay for products, which we demonstrate in other studies, but this particular study shows that high production enjoyment actually also increases buyers' initial interest in a service, which, of course, is very important as sellers look to move these prospective buyers through the purchase funnel.

In another field study, which was also fun, we set up a booth at a university student fair. And at this booth, we displayed two brownies right there on the table. And each of the brownies had a quote from the head chef beside it. One of the brownies was accompanied by a quote stating that it was the chef's most popular brownie, while the other brownie sitting there was accompanied by a quote stating that it was the brownie the chef most enjoyed making.

So we were basically pitting a cue of popularity versus this cue of high production enjoyment and seeing if there was a difference.

And so for the results, again, pretty fascinating. After about 300 people visited the booth, roughly 67% — well over what you'd predict by chance — chose that enjoyably made brownie over the popular one. So that production enjoyment signal seemed to win out here even over a signal of popularity, which we found to be pretty cool.

Now, of course, there are boundaries to the power of signaling production enjoyment. So I want to make sure I mentioned a study that shows that it doesn't hold in every single context. Specifically, we believe that if a seller enjoys a low-skilled task, this isn't probably all that attractive because it might mean that this low level of skill represents their maximum ability.

In a study, and this one we conducted online, we actually created a mock website for a dog washing service. And in one condition, we portrayed the company to offer a relatively, what we considered a high-skilled version of dog washing. It was all done by hand. And in the other condition in this experiment, we instead portrayed that same company as offering a relatively low-skill version of dog washing, which was largely achieved through machine automation.

When the dog washer washed by hand and needed high skill, indeed, we saw that participants were willing to pay significantly more when that worker enjoyed their job. But when this dog washer instead didn't need that much skill, most of the washing was automated, we no longer saw this effect hold. So now participants were no longer willing to pay more when the worker enjoyed their job.

In this low-skill context, production enjoyment did not make a difference in buyer's willingness to pay for the service. So it seems like this effect is dependent on the perceived level of skill necessary to sort of achieve that work or to create that product.

And then just to tie a bow on everything here, I'll mention one final study where we actually examined 100 of the most common sort of consumer-facing jobs and asked people how much enjoyment would affect their buying and selling prices.

Again, pretty robust effect here, where across all 100 of those jobs, we consistently saw this asymmetry, where buyers said they would pay more for sellers who enjoy the work, while sellers said they would charge less for this very same enjoyable work. So it seems very robust.

Again, there are some of these boundaries like that perceived skill I mentioned, but across the board, it seems like this thing is pretty powerful.

Croft: It seems like there's some practical implications certainly for sellers in this. So it seems like whoever's listening to this or reading your study who changes their Etsy profile first will get a leg up. Is that the case?

Zane: I'd say in short, if you enjoy the work you do, make sure you let that be known. As you alluded to, put it in the product description. Put it in the bio on your website or the profile of your Etsy page. And again, prospective buyers should think you do better work, should be willing to pay more for it.

Again, this is particularly the case for jobs that require relatively more skill, including those that aren't automated. So keep that in mind. We also show that production enjoyment, it doesn't only increase buyers’ willingness to pay, but it can also attract them to your product or service from the beginning. So it’s also maybe good to consider mentioning your enjoyment in a product advertisement that you might do on social media, for example.

More generally, we think the saying "Don't sell yourself short" applies quite nicely here. Because in general, I think sellers should be aware that their high enjoyment of certain production processes could actually be leading them to unknowingly undervalue their products and services, at least relative to buyers' perceptions of the quality of these goods.

Croft: Now, on the flip side, what are some of the practical implications or things that buyers should be aware of?

Zane: I think buyers should, in general, be aware that they might unknowingly be willing to pay a premium if a seller seems like they really enjoy making a certain product or service. Because again, this is leading us to infer that the product is of high quality.

At the same time, I think you could say that if a seller seems like they really enjoyed making a certain product or service, in some instances at least, this could actually signal that the product's undervalued in the marketplace, given that sellers tend to charge less for the things that they enjoy making.

But in general, I think buyers, especially in peer-to-peer markets, should simply be aware that production enjoyment can play an influential role in their pricing judgments.

Daniel Zane

Daniel Zane

Daniel Zane, Ph.D., is an associate professor in the department of Marketing at Lehigh Business.