I adore a great deal just like anyone else. But I also recognize we live in a consumer-driven world, where retailers are always pushing for sales — even if that means misleading shoppers into believing they’re scoring a bargain when they aren’t.
Whether you’re an avid deal-hunter or someone who reserves spending for necessities, you’ve probably noticed odd pricing phrasing at stores, both online and offline. What’s going on, and why do merchants use this language?
The Power of Words When a retailer wants to promote a sale or boost conversions, it may employ slightly deceptive wording to imply you’re getting a better bargain than you really are. This tactic is known as pricing psychology.
Here are some of the most common tactics:
Size and Wording Matter
Gregory Ciotti, writing for the Huffington Post, points to a Carnegie Mellon study that discovered a DVD-subscription program saw a 20% uptick in trial sign-ups when the company adjusted its copy from “a $5 fee” to “a small $5 fee.” That single added word markedly improved the company’s results.
A Penny Can Change Perception
Another pricing trick you probably know is listing an item at $2.99 instead of $3. You only save a penny, but that lower-looking number is more likely to prompt a purchase.
This tactic is called “charm pricing,” as explained by Pius Boachie in an Entrepreneur.com article.
Taking it further, Boachie notes that prices ending in 9 generally appear to be better bargains. A 2005 study by Manoj Thomas and Vicki Morwitz at Cornell details the “left-digit” effect. They found that when the leftmost digit of a price changed — for example from $3.00 to $2.99 — consumers were likelier to buy than when the left digit remained the same, such as $3.60 to $3.59.
Likewise, Boachie references a joint University of Chicago and MIT study using women’s apparel to test pricing. The researchers discovered that an item priced at $39 outsold the same item listed at $34 or $44, even though it wasn’t the cheapest option.
The Temptation of BOGO
Another familiar tactic is “Buy One, Get One” or “BOGO.” Some promotions give a free item when you buy one at full price, while others offer the second item at half off.
Boachie suggests the key driver here is consumer greed. You’re far less likely to hesitate at paying full price for an item if you know you’ll receive another for free or discounted. Without the BOGO, you might not have purchased the first item at full price.
There are numerous other examples of pricing psychology, but these illustrate the basic techniques many businesses use to nudge you into thinking you’re getting a steal when that may not be the case.
How to Outsmart Pricing Psychology
Try to keep your emotions out of shopping (yes, even if you’ve had a rough day and REALLY want that cookie-dough ice cream). Shelly Frost at Chron explains pricing psychology is first and foremost designed to exploit your emotions.
Before snapping up a deal that seems irresistible, pause and evaluate whether it truly is a bargain. Often, the answer will be no. In short, resist impulse reactions when you’re shopping.
Avoid malls and online shops unless you genuinely need something. Even the most disciplined person can be lured in by clever pricing tactics. Writing for The Simple Dollar, Leo Babauta of Zen Habits, recommends always making a shopping list and sticking strictly to it. That’s tough if you’re trying to break a shopping habit, but your bank account will appreciate it.
Another tip from Babauta is to pay with cash only when you shop. With a fixed amount in hand you’re far less likely to fall victim to pricing tricks and buy unnecessary items. Leave your cards at home to limit temptation.
By becoming a more informed shopper, you’ll be better at spotting when retailers are attempting to take advantage of you with pricing psychology, enabling you to make wiser choices about what you purchase.
