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Online shoppers will pay more for privacy

Created: 12 Jun 2007 • Updated: 18 Dec 2012
Tim Callan's picture
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Carnegie Mellon recently released research indicating that shoppers are willing to pay more online if they believe their privacy is protected. The article studied real purchasing decisions using real money (test subjects got to keep their savings) and found that shoppers were willing to spend an extra $0.60 on a $15.00 purchase, a 4% increase in ASP. In the world of online commerce, that's an enourmous amount of additional margin for a site.

It makes sense to me that online retailers will seek to differentiate themselves based on this information. Consumers value best-in-breed privacy to the tune of a 4% price increase. That means a merchant who engages in the best practices to protect customers' confidential information should expect customers to prefer her site over others' with equivalent prices but less attention to protecting confidential information. In fact, this site should be able to maintain slightly premium pricing and still have an advantage.