For Women Especially, It Pays to Know What Car Repairs Should Cost

 
 
Consumers can negotiate cheaper auto repair prices by convincing service reps they know something about market rates—helping women overcome gender discrimination, according to recently published research by Ayelet Israeli and co-authors.
 
 
by Wendy Guild Swearingen

Women who come prepared to challenge an auto repair quote can overcome gender discrimination and negotiate a fairer price, according to recently published research.

That's one conclusion from the research study Repairing the Damage: The Effect of Price Knowledge and Gender on Auto-Repair Price Quotes, published in the February issue of Journal of Marketing Research. The large-scale field experiment investigated whether price expectations of consumers--male or female--can influence the final price. The answer: yes.

The researchers found that:

  • Repair shops quoted higher prices to callers who overestimated the market price of the repair.
  • Women were quoted a higher price than men when either explained that they were uninformed about repair prices.
  • Gender differences disappeared when callers mentioned an expected price—even an inaccurate one—for the repair.
  • Repair shops were more likely to offer a price concession if asked to do so by a woman than by a man.

“We show that the price a consumer expects to pay can alter the negotiation of consumers with individual firms directly by changing the price offers made by sellers,” according to the paper’s authors: Ayelet Israeli, an assistant professor in the Marketing Unit at Harvard Business School, and Meghan Busse and Florian Zettelmeyer, both professors at Northwestern University.

Somewhere, a radiator leaks

For the study, “mystery shoppers” posing as consumers contacted 2,778 repair shops for a quote to fix a leaky radiator on a 2003 Toyota Camry. To help answer the question of whether consumer knowledge would influence the prices quoted, callers used three prepared scripts to tip off shop reps about their price knowledge: informed (knows the market price for a repair is about $365), uninformed (no idea what the price should be), or misinformed (provides an expected price of $510, way above the market average).

Consumers who display knowledge about repair costs can get a better price. SOURCE: Kali9

A second part of the study tested how willing shops were to offer price concessions after they had already provided a quote that was higher than consumers’ expectations. Immediately after receiving the quote, some callers queried whether the repair business would be willing to match the expected price published by the online automotive repair website AutoMD.com.

The researchers conducted the experiment with AutoMD, whose call center staff had experience in extracting repair prices from service shops. “They were willing to have their experienced employees use our scripts, so that was ideal for us to test the effect of consumer price knowledge on seller quotes,” says Israeli.

“In short, shops appear to respond to whatever information they have about consumers’ price knowledge, drawing inferences from gender if that is all they have to go on, but disregarding gender if provided more direct information on consumers’ price expectations,” the researchers write.

Gender differences came to the surface after the field research results were analyzed. The team discovered that female callers who said they were uninformed about repair costs were quoted prices about $20 higher than male callers who presented themselves the same way. But when women indicated that they knew the market price for the fix, “gender differences disappeared,” says Israeli.

The chivalry effect

In addition, women benefited more than men in at least one type of exchange. Women who asked for a price concession were 10 percent more likely to get one than men, for an average 13 percent off the bill. (Overall, shops were very reluctant to grant reductions—almost 75 percent of requests for a price break were denied.)

“That’s a pretty interesting twist,” says Israeli. “We can’t really say for sure what the [shop reps] were thinking, but we can hypothesize. If you look at other literature, there is something called the chivalry effect, which basically means that men would be more likely to respond positively to women if they ask something from them.”

So, in a sense, it might be comforting to learn that not all women are price-discriminated against at repair shops. “Once women revealed that they have any information—and it doesn’t matter if it’s correct information or incorrect information—sellers altered their price quote,” Israeli says. “What is interesting is that once any benchmark price is mentioned, all gender differences disappear, and that is what’s very powerful about having information.”

In addition to gender bias, Israeli says another surprising finding was the fact that men who admitted to being uninformed about market repair rates were not as penalized for their ignorance as women were—on the contrary, there is some evidence that uninformed men oftentimes were quoted lower prices than informed men. “We thought we would see people with no information get really exploited,” says Israeli, “but it turned out that shop reps interpret lack of price knowledge differently for men and for women. When men said they have no idea about prices, repair shops seem to have interpreted that as them being strategic and offered them a lower price, but when women said the exact same thing, they were exploited.”

Lessons for consumers

Israeli studies how the internet affects interactions of both consumers and firms with each other, especially how online interactions can affect off-line interactions and vice versa.

“I was very excited about this because, even though the attention-grabbing result here is that women get price discriminated, we can fix it with a relatively low cost,” she says. “But the other aspect is that consumers actually are able to change [their] behavior based on signaling the price knowledge that they have. That was a very exciting result for me.”

One lesson for women is that they should mention their price expectations up front. “This lowers the initial quote while not negatively affecting any subsequent match concessions,” the researchers advise in the paper.

Also, women interested in securing a better price for a service should learn to haggle more. Israeli points to research that suggests one reason women have lower salaries than men for similar positions is because they are less likely to negotiate. “What that literature finds is that once women negotiate, they’re much better off. The interpretation of that is that sellers don’t expect women to negotiate, and once they do, they are treated like anyone else,” she says.

For men, it’s an advantage if they mention their price expectation into the conversation late in the game. “Mentioning a market-based expected price up front may increase the initial price quote, but does not increase the benefit of using it later to ask for a price concession.”

A caution overall: if consumers drive for a lowball price, they may be disappointed. In an additional experiment, callers gave an expected price of $310, which was significantly lower than the $365 benchmark price. The repair shops didn’t bite.

It pays for all consumers in a negotiated price settlement—everything from buying a house or a car to hiring a contractor—to do their homework when it comes to average prices, and to be clear about what price is expected.

“Having an expected price in mind enables consumers to use bargaining strategies that they might otherwise not use, such as mentioning the expected price or negotiating for a price concession, strategies which in turn may lead firms to offer different prices from what they would have offered otherwise,” the researchers conclude in the paper.

Says Israeli: “The wonderful thing here is that with the internet and the surge of all these companies that improve transparency and provide information to consumers, it is so easy to find out the information. You can become informed really quickly and with pretty low cost, and it makes a difference.”

Wendy Guild Swearingen is a writer and editor based in Western New York.

Related Reading:

Fix This! Why is it so Painful to Buy a New Car?
Lessons from Running GM’s OnStar
Deconstructing the Price Tag

Has information and preparation helped you get better prices for auto or other repairs? What is your advice to fellow consumers?

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