How to Train Your Brain Not to Fall for These Retail Pricing Tricks
No matter how much we fancy ourselves to be seasoned savvy shoppers, we’re all prone to retailers’ pricing tricks. I’ve said it before and I’ll say it again (and I say it often to myself): Sales and specials aren’t actually doing us any favors; they’re, without exception, in favor of the retailer. So how can we spot these psychological pricing strategies and see what’s behind them? And how do we disregard sales, specials, and “good prices,” or—even better—actually flip the game and use them to our advantage?
Prices ending in 9
Ending a price with a 9 increases sales by 24 percent, according to Priceless author William Poundstone. We may be used to seeing this strategy most often with prices that end in .99. In this instance, the strategy works because we read left to right and therefore give more weight to the first number we see. For instance, we think of a $1.99 item as closer to 1 dollar than to 2 dollars.
Interestingly, however, pricing something at one cent below the next whole dollar amount isn’t the only thing that fools us. Researchers from MIT and the University of Chicago demonstrated that women’s clothing with a dollar amount ending in 9 ($39) sold significantly better than shirts priced below this amount at $34.
Retailers know that consumers subconsciously associate the number 9 with a bargain. So when you see a 9 on the tag, think twice about the actual price of the item. Counteract the implied association of 9 with a bargain find by telling yourself that the price is an illusion of a bargain. That in itself strips the technique of much of its power. Then, always remember to round up when you see a 9 to give yourself a feel for the actual closest price.
(Image credit: Jessica Sharmin/Stocksy)
Dollar prices without cents or without dollar signs
This is a strategy used in higher-end establishments with higher-priced items. As Money Talks News puts it, “The implication is that if you’re concerned about pocket change, you should move on.” Reverse psychology is at play here, putting you subconsciously in the offensive state of “proving” you belong by spending the money without concern.
When you see whole dollar amounts or prices listed without dollar signs (this occurs often in restaurants), being aware of the strategy at play is often enough to put you on guard so you don’t overspend just to, unwittingly or not, prove something.
The BOGO tactic (buy one, get one free) stands to benefit the retailer in more than one way. Perhaps BOGOs are a way to offload product that isn’t selling well. But the offer itself gets people into the store—and therefore makes it likely that they’ll spend money on other things while they’re there. (This is called loss-leading pricing.)
In addition, the “get one free” part of the equation may be skewed by hiked up prices, a technique which minimizes the retailer’s profit loss. For instance, a BOGO special on milk could offer two gallons of milk for $5 when the milk normally costs $3 rather than $5 for one gallon.
Finally, because a customer typically perceives that a BOGO is such a steal, they may be inclined to buy more than they normally would and/or to buy something they wouldn’t ordinarily buy.
Before you start loading your cart with BOGOs that you may not have room for, that could spoil before you’re able to use them, and that you wouldn’t normally buy in the first place, consider whether the item as been marked up from its standard regular price or can be bought cheaper elsewhere. This way you can see if the price you’re paying per item is actually that much of a savings. Next, ask yourself if you’d buy the item if it weren’t on sale and if you really need two (or multiples thereof) of the item.
If it’s something you wouldn’t ordinarily buy, consider passing it up altogether; if you don’t need even two of the item, ask if you can buy one at half the price (sometimes this is the way savings are rung up, but be sure to check first). Finally, if it’s an item that really is a good price and you’d buy it anyway and find that it’s a good time to stock up, refrain from overbuying.
Bundle pricing is when more than one item is packaged together for purchase at a single price. It works on the concept of consumers feeling like they’re getting something for free and increases the retailer’s bottom line by driving up overall sales. In other words, more people are likely to buy something in the first place when they are getting something “for free.”
Bundle pricing can come in several different forms. For instance, a restaurant may offer a free dessert with the purchase of an entree, a video game console could come bundled with a free game, or a grocery store could offer 10 for $10 on canned vegetables.
As with many of these pricing strategies, begin by asking yourself if you would have bought the item in the first place. If you would use the main item but the bundled item increases the overall price, consider buying just the item itself. Something you don’t need costs you not only money but storage space and time dealing with it as well.
Finally, if the special involves more items than you reasonably need (like ten cans of black beans, for instance, when you only need two), find out if you need to buy the total number advertised to get the special price. Usually, you can purchase fewer items and still take advantage of the bundled price.
Customer limits on special prices
Coupled with discount pricing, a cap like “limit six per customer” heightens the sense of demand, creates the illusion of scarcity, and ultimately activates the hoarding instinct in customers. For instance, you may have only needed to purchase two jars of pasta sauce, but instead this strategy makes you think, “Ohmygoodness this is such a good deal and I better get all that I can while supplies and this special price last!”
If the item is something you regularly buy and regularly use (and you have the space and budget for stocking up), by all means, go for it. Just don’t be suckered into buying something you don’t really need or even want or into putting more than you need in your cart.
(Image credit: Daniel Kim Photography/Stocksy)
Free shipping thresholds
We’re all familiar with this one. The banner screaming, “Free shipping when you spend $50 or more!” And retailers know most of us will find a way to find more things we “need” in order to fill up our carts and spend more overall money to cross that free shipping threshold.
Remember that spending $5 on shipping is still keeping more money in your pocket than spending $20 on things you could live without.
Price lining involves offering various tiers of items with slight differences in features. What immediately comes to mind is Dyson vacuum cleaners. Yes, that top-tier vacuum has special, powerful features, but are they worth the extra few hundred dollars compared to the more-than-good-enough entry level model? Price lining is also sometimes employed to prey on consumers’ Goldilocks-like tendency to always choose the middle option.
Realize that the premium features are not necessarily worth the premium price. Consider what features you really need for your unique and particular needs and be content with the model that simply meets your needs.
Artificially inflated prices
Items are marked at higher prices either because of the exclusivity of the location or to increase perceived value. Even if we think we’re immune to class-consciousness, we tend to consider that items that are more expensive (sometimes drastically) must have inherent value. Consider the case described by Robert Cialdini in his book “Influence: The Psychology of Persuasion“: A jewelry store intending to slash some jewelry prices by half to get them sold accidentally doubled their prices instead; the items quickly sold out “because when customers saw the high prices, they perceived the jewelry to be more valuable.”
Many times, we do get what we pay for and in the long run, spending more initially ends up being a better bargain than opting for the cheapie find that doesn’t work well or breaks. However, knowing that up-charging is a strategy freely employed by retailers whose customers “fall for it” can save us from shelling out more than we need to when we can easily get a quality generic for much, much less. If you’re able to compare tangible elements like materials and build quality, that’s a better indicator of what something is truly worth than the price on the tag.
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