The psychology behind what makes something valuable, how exceptional businesses influence our decisions, and why the most profitable part of a product might have very little to do with the product itself.
There is a rather wonderful story about Ferrari owners paying for the privilege of collecting their own cars from Maranello. Advertising thinker Rory Sutherland has used it to illustrate how a manufacturer can turn an otherwise unremarkable delivery arrangement into something customers actively desire. Instead of having the car transported to a dealership, the owner travels to Italy, visits the home of Ferrari and becomes part of an experience that they'll probably remember for years.
The frequently quoted additional charge of around £500 is difficult to verify as a current Ferrari offering, so I wouldn't treat that figure as established fact. But the underlying idea is fascinating, particularly because Ferrari's wider approach to factory visits, personalisation and client relationships is very real.
At first glance, there's something faintly absurd about paying extra to collect something you've already purchased. In almost any other industry, arranging your own collection would be regarded as an inconvenience, perhaps even deserving of a discount. Yet place the same activity within the history, theatre and extraordinary appeal of Maranello, and the calculation changes. The owner isn't thinking about the cost of transportation. They're imagining the journey, the factory, the first encounter with their car and the pleasure of being able to tell somebody, years later, that they collected it from the place where it was made.
That change in perception is an excellent introduction to behavioural economics, and something I think deserves far more attention from people responsible for brands, products and customer experiences.
We're accustomed to discussing value in fairly practical terms. Manufacturing costs, materials, specifications, performance, delivery times and what competing products are charging. These are all important, naturally, but they're only part of the reason people choose to buy something. Human beings don't make decisions by examining every available piece of information, calculating the most economically sensible outcome and proceeding accordingly. Our choices are shaped by expectations, memories, associations, identity and the circumstances in which something is presented.
We might know perfectly well that one option is considerably more expensive than another, yet still feel that it's the right decision. We might wait months for an object that could be replaced with something readily available, or travel hundreds of miles for an experience that might technically be obtainable closer to home.
What interests me is that these choices aren't necessarily irrational. They're often entirely understandable once we look at what the customer believes they're receiving.
The extraordinary value of context
Porsche offers an especially clear demonstration of this thinking. At its Leipzig facility, customers can pay for a factory collection programme that includes a tour, a restaurant experience and time driving on the manufacturer's test facilities.
What makes Porsche's approach particularly interesting is that it doesn't offer just one factory collection experience. It offers three.
The entry programme costs €2,023 and includes 30 minutes of on-road driving and 30 minutes off-road. The Advanced programme costs €2,875, extending the experience with 60 minutes on the dynamic and circuit track alongside 30 minutes off-road. At the top sits Accelerate, priced at €4,959, with 120 minutes of circuit driving and individual instruction from a Porsche specialist.
Each programme includes the wider occasion of visiting the factory, enjoying a three-course meal and receiving the car through a personal handover. The customer isn't simply choosing whether or not to collect a vehicle from Leipzig. They're choosing how much of the day they'd like to devote to the experience, and what sort of memory they want to create.
There's a fascinating piece of psychology in presenting those three options together. The first establishes a starting point. The most expensive demonstrates just how elaborate the occasion could become. The middle option provides a way of enjoying something additional without committing to the full experience.
Whether Porsche deliberately designed its pricing around these behavioural principles is something we can't establish, but the structure illustrates them remarkably well. A customer who might initially have questioned paying €2,023 to collect a car is now being invited to make a rather different decision. Which experience would they most enjoy? Would the additional driving time be worthwhile? Might they regret not taking the opportunity to do something they may never repeat?
The practical task of receiving the vehicle has become a choice about the kind of occasion somebody wants to have.
Behavioural economics gives us several useful ways of understanding what's happening here. One is anchoring, the tendency for an initial piece of information to influence how we judge subsequent information. Another is the effect of choice architecture, where the way alternatives are presented influences how people evaluate and select between them.
The €4,959 programme establishes a very different reference point from a single €2,023 offering. Against that higher figure, the Advanced programme may feel like an attractive balance of additional experience and expenditure. And the entry programme might appear comparatively modest, even though nobody would normally describe spending more than €2,000 to collect a car as modest.
It's tempting to call this a textbook example of the middle option being designed to attract the majority of customers, but we don't have Porsche's purchasing data or evidence of its pricing intentions. The value of the example is that it allows us to see how the existence of alternatives can change the way a customer thinks about the original proposition.
There is also an important commercial distinction. The more expensive programmes involve additional driving time, facilities and specialist instruction. Those things have genuine operating costs, so we cannot assume the difference in price represents additional profit. The intelligence lies in recognising that different customers will value the experience differently, then developing services that accommodate those preferences rather than insisting upon a single standard offering.
Now imagine how different the proposition would feel if a dealership simply charged €2,023 to hand over your keys.
The underlying transaction still involves the same vehicle changing hands, but the customer would interpret the two experiences very differently. One sounds like an inexplicable administrative charge. The other sounds like something worth arranging a trip around.
Porsche has created something worth paying for by examining an activity that could otherwise have been treated as a routine part of its operation. It's a compelling example of how commercial creativity can emerge from understanding what customers actually value, rather than simply looking for ways to charge more for an existing product.
This doesn't mean expensive surroundings can rescue an ordinary proposition. A knowledgeable buyer may see through an elaborate presentation very quickly. The experience needs sufficient substance to support the expectation it creates.
It's also worth remembering that customers with significant financial means are not necessarily indifferent to price. They may simply be placing greater value on different things. Time, privacy, access, personal attention, expertise and the ability to have something arranged around their preferences can matter enormously.
The opportunity lies in understanding those preferences, rather than assuming that wealth automatically creates an appetite for extravagance.
Why something becomes more valuable when it becomes yours
Ferrari's Tailor Made programme reveals another fascinating aspect of customer psychology.
Clients work with specialist designers to develop highly individual specifications, exploring materials, finishes and combinations that reflect their personal tastes. The process gives them an opportunity to participate in the creation of something they may already have spent years wanting to own.
It's easy to describe this as personalisation, but I think that word can make the experience sound rather mechanical. Choosing from a list of optional extras isn't necessarily the same as sitting with somebody who understands the design of the vehicle, exploring unusual materials and contributing to a specification that feels distinctly your own.
One experience is a transaction. The other can become a personal project.
Research into what's known as the IKEA effect helps explain why participation can influence the value we attach to things. In experiments involving assembled objects, researchers Michael Norton, Daniel Mochon and Dan Ariely found that people could place a higher value on things they had helped create. Interestingly, the effect depended on their efforts leading to a successful result. Work alone wasn't enough.
It's a phenomenon worth exploring in far more sophisticated settings, although we shouldn't assume that assembling a flat-pack box and commissioning a Ferrari produce identical psychological responses.
There's an important distinction between making customers do work because a business doesn't want to, and giving them the opportunity to participate in something meaningful. A bespoke tailoring appointment, for example, involves measurements, decisions, discussion and sometimes several fittings. None of this is particularly efficient when compared with buying a jacket from a rail, but efficiency isn't really the objective.
The customer becomes involved in the creation of the finished piece. They begin imagining how it will fit, where they might wear it and how it will become part of their wardrobe. By the time it's ready, the garment has already occupied a place in their imagination for weeks.
There's another related psychological principle called the endowment effect, where people can assign greater value to something once they feel they own it. Research has demonstrated this in relatively simple exchanges involving everyday objects. In a premium retail environment, I think it's worth examining how psychological ownership might begin before the purchase is completed.
A client who has spent time choosing the leather, stitching and proportions of a bespoke piece has already made decisions that feel personal. They've imagined the finished object as theirs. Asking them to abandon the purchase may now feel different from asking them to decline something they haven't yet experienced.
This is commercially interesting, but it also introduces a responsibility. The design of the experience should help people make choices they'll enjoy living with, not exploit the discomfort of walking away from decisions they've already made.
Ferrari's commercial performance shows why personalisation deserves serious attention. In its financial reporting, the company has explicitly identified personalisation as a contributor to favourable product mix and profitability. The valuable insight isn't that adding an unusual colour or interior finish automatically creates extraordinary margins. It's that a business with genuine creative and manufacturing expertise can offer customers choices they care deeply about, and build a commercially valuable service around helping them make those choices well.
I suspect this is where many other businesses leave money on the table. They offer a product in a fixed format, assume the customer wants the simplest possible purchasing process and overlook the pleasure some people would derive from being involved. Others go too far in the opposite direction, offering so many choices that the experience becomes exhausting.
The skill lies in knowing which decisions customers will find rewarding, which decisions are better left to an expert and how those two forms of judgement can work together.
We remember moments, not every minute
Another part of behavioural economics that I find especially relevant to customer experience is the way we remember events.
A wonderful evening in a restaurant might involve three hours of conversation, excellent food, attentive service and a great many small interactions. Yet when somebody asks us about it a week later, we probably won't recount everything in chronological order. We might remember the welcome, a particularly remarkable dish, the conversation with the sommelier or the way the evening ended.
The peak-end rule describes the tendency for certain emotionally significant moments and the ending of an experience to exert disproportionate influence on how we remember it. It's not an absolute law, and research into hospitality has also found the first impression to be important. Still, the broader lesson is valuable: the quality of an experience cannot always be understood by simply adding up the quality of its individual parts.
A business might spend considerable sums improving aspects of its service that customers barely notice, while paying surprisingly little attention to the moment that will become the customer's strongest memory.
Think about the collection of a bespoke watch, the arrival at a country house hotel or the final evening of a remarkable holiday. These are opportunities to make something emotionally significant happen. That doesn't require an elaborate performance. Sometimes a thoughtful gesture, accurate recollection of a preference or the opportunity to speak with somebody whose expertise has shaped the product can be far more memorable.
What matters is that the moment feels appropriate and genuine.
The Macallan provides an interesting example of taking the experience surrounding a product seriously enough to offer it as a product in its own right. At its Speyside estate, the distillery offers private experiences that bring visitors into the history, production and character of its whisky. Its published Estate Experience is priced at £3,000 for up to six guests, while the more extensive Legacy Experience is priced at £6,000 for up to six.
Of course, a private visit with specialist hosts, food, drink and access to particular facilities involves meaningful operating costs. But the customer isn't simply paying to learn how whisky is made. They're spending time within a world that helps explain why the product commands attention, and they're creating a memory that may become inseparable from their appreciation of the brand.
I find it particularly interesting that an experience like this can have commercial significance in several different ways. It generates revenue in its own right. It may strengthen a customer's relationship with the business. It can make the product easier to understand and appreciate. And it creates opportunities for future engagement, provided the experience deserves that continued relationship.
Not all of those effects are immediately measurable, and none should be assumed without evidence. But together they suggest a much broader way of evaluating the return on investment from customer experience.
Too often, businesses assess an experience by asking what it cost to deliver and what the customer purchased immediately afterwards. That's useful information, but it can miss the longer life of a genuinely memorable encounter.
A guest who returns three years later, recommends a business to a friend or becomes interested in a more individual service is creating value over a much longer period than the original transaction. Understanding that behaviour requires patience, appropriate customer research and a willingness to examine the relationship rather than merely the sale.
There is another interesting dimension here: anticipation.
The pleasure of an experience doesn't necessarily begin when it happens. Someone planning a trip on a private yacht, commissioning a watch or waiting for a specially ordered car may derive enjoyment from looking forward to it. The conversations, plans and occasional updates become part of the experience itself.
A well-designed customer journey recognises that period of anticipation as something worth supporting. It gives people useful information at the right time, creates opportunities for genuine involvement and allows excitement to develop naturally.
It also knows when to leave people alone. Repeated messages, unnecessary notifications and artificial countdowns can quickly turn anticipation into irritation.
The fine line between desire and manipulation
We can't discuss behavioural economics in premium markets without discussing scarcity.
A limited-production sports car, an exceptional vintage wine or a watch produced in small numbers can become desirable partly because access is restricted. There may be perfectly sound reasons for this: specialist manufacturing capacity, the availability of materials, the time required to produce something properly or the fact that only a small number of customers can be given a particular experience.
Research suggests that genuine rarity and manufactured scarcity don't always influence customers in the same way. People may attach greater significance to something that is naturally difficult to obtain, particularly when that difficulty reflects its materials, craftsmanship or production.
But scarcity is frequently overplayed.
The moment every collection is described as limited, every invitation is supposedly private and every customer is told they're receiving an opportunity unavailable to anybody else, those claims begin to lose their meaning. Worse, the customer may start wondering whether the business is genuinely exceptional or simply very good at manufacturing anxiety.
This is where I think exceptional brands need to exercise restraint.
Hermès offers a useful contrast through its emphasis on craftsmanship and the skills involved in making its products. Its Hermès in the Making events have invited visitors to observe artisans, discover techniques and understand the work behind the finished objects.
It's an effective way of communicating why certain things require expertise, time and patience. Rather than relying entirely on an assertion that something is desirable, the business gives people an opportunity to understand the substance behind that desirability.
For a customer, that knowledge can change the nature of the purchase. The object now carries an association with particular skills, materials and traditions. It has become easier to appreciate qualities that might previously have been invisible.
And that distinction matters commercially. When customers understand what makes something difficult or expensive to produce, price can become easier to justify without relying on exaggerated claims or aggressive selling.
I would argue that this is one of the more sophisticated uses of behavioural understanding: helping customers notice the value that already exists.
It's also where design has a particularly important role. Photography can reveal the texture and construction of a product that might otherwise look unremarkable online. A beautifully produced publication can explain the decisions behind a piece of architecture. An expertly planned private appointment can introduce a customer to somebody whose knowledge gives them greater confidence in what they're buying.
None of those things automatically requires the business to change its underlying product. They require it to communicate and deliver the product's value in a way that people can genuinely appreciate.
Turning better experiences into better business
The commercial implications extend well beyond established luxury houses.
Imagine an independent residential developer completing a small collection of remarkable homes. The business might have invested heavily in architecture, materials, landscaping and interior detailing, then treat the purchasing journey as a fairly ordinary property transaction.
There may be an opportunity to approach that experience differently. A private viewing could be arranged around the prospective buyer's interests rather than a standard sales presentation. A beautifully produced book might explain the architecture, materials and character of the development. The handover could include time with somebody who genuinely understands the home and can introduce its less obvious qualities.
These ideas would require investment, and they certainly wouldn't be appropriate for every development. But the question is worth asking: if the business has already gone to extraordinary lengths to create something special, why should the experience of discovering and buying it feel ordinary?
The same thinking applies to specialist travel, private estates, fine goods, hospitality and professional services.
A company selling individual travel experiences might spend considerable money attracting enquiries, yet send proposals that look almost identical to those of every competitor. A specialist manufacturer might produce objects of remarkable quality but provide very little insight into the people or processes behind them. An established business could possess decades of accumulated expertise while presenting its services as a collection of interchangeable options.
In each case, there may be value that customers are never given a proper opportunity to recognise.
The answer isn't simply to add theatrical moments or charge for activities that used to be included. I'd begin by understanding where customers currently experience uncertainty, where they feel genuine excitement, which decisions they value making themselves and which aspects of the relationship deserve more personal attention.
From there, we can explore what customers would find valuable enough to pay for, what should be included as part of an excellent service and what might create commercial benefits over time.
There's a real financial discipline to this. A bespoke appointment may increase average transaction value but require additional specialist time. An exceptional handover might improve customer satisfaction without producing an immediate measurable sale. A private experience could create additional revenue while also increasing operating complexity.
For a business owner, those distinctions matter. The objective is to improve contribution and long-term customer value, not merely increase spending on impressive experiences.
I'd want to understand average spend, the cost of serving different customer groups, repeat purchasing, referral quality, demand for personalisation and the effect on pricing confidence. Some of those measures can be investigated through transaction data; others need direct customer conversations or carefully designed experiments. It's also worth measuring whether a proposed experience genuinely makes customers happier, rather than assuming that higher expenditure represents a better outcome.
There is a very useful distinction between making it easier for someone to spend more and giving them something they're genuinely pleased to have spent more on.
The former might produce a short-term improvement. The latter has a much better chance of becoming a relationship worth maintaining.
And I think that's where behavioural economics becomes most interesting to anybody responsible for design and creative direction. It encourages us to examine the meaning people attach to products, services and experiences, rather than assuming that the practical function is all they're paying for.
The value people take home
We often talk about customer experience as though it were a series of things a business does for somebody. The welcome, the transaction, the delivery, the follow-up. But much of the value is created in the customer's own mind, through the expectations they develop, the decisions they make and the memories they form afterwards.
A beautiful object can be appreciated for its materials and workmanship. It can also remind somebody of an important occasion, a relationship, an achievement or a place they've visited. A journey can be enjoyable because of where it takes us, but equally because of the anticipation beforehand and the stories we bring home.
Those associations are difficult to reproduce, which helps explain why businesses capable of creating them can occupy a very different commercial position from competitors offering something superficially similar.
The interesting lesson from Ferrari isn't that customers can be persuaded to pay for a task that would normally be free. It's that an apparently mundane activity can acquire extraordinary meaning when it becomes part of something people care deeply about.
Once you begin looking at businesses through that lens, you notice possibilities in places that might otherwise be dismissed as routine. A consultation, a fitting, a first visit, a delivery, a handover or an invitation to see how something is made can all become part of the value of what is being sold.
Some of those experiences may justify an additional price. Others will earn their return by strengthening confidence, encouraging loyalty or giving a customer a reason to choose one business over another.
The most successful examples, I suspect, begin with a genuine understanding of what customers find rewarding. They respect the intelligence of the person making the purchase, recognise that value is both practical and emotional, and have the confidence to invest in experiences that deserve to be remembered.
After all, a customer may eventually forget precisely what they paid for something. They are far less likely to forget why it mattered to them.