Save money by avoiding these 7 popular pricing gimmicks
Every time you walk into a store, a new conflict begins – a battle between your budget and that store’s bottom line. You want to spend very little. The store wants you to spend very much. Only one of you can win.
In order to come out ahead, stores always have a few tricks up their sleeves. These simple deceptions are designed to encourage you to spend more money. They can be very persuasive, but if you know how to spot them you can “win the war” and manage to save yourself some money in the process.
By now we all know that retailers use odd numbers in the price of their goods because of how it affects our perception of those prices. Even though we know that $4.99 is only one penny less than $5, the 4 is the part of the price that sticks out the most and, subconsciously, we interpret that price as being closer to $4 than $5.
It’s a trick that retailers still use because it’s still effective. $4.99 is a more appealing price than $5 (and not just $0.01 more appealing). Train yourself to round up and visualize the price more accurately.
Unit price confusion
The unit price is supposed to help you better understand the value of a product, especially as it compares to other similar products. The problem, however, is that most states don’t have any set requirements for how unit prices are used. This leads to situations where products have wildly different unit prices because they aren’t being calculated using the same base unit.
Make sure you understand what the unit price is actually saying. And, when in doubt, don’t hesitate to break out the calculator.
10 for $10!
While stores love to imply that you need to purchase a certain quantity of an item in order to get a discounted price, it’s rarely a requirement. In fact, most states prohibit sales involving a minimum purchase. So check first before throwing ten boxes of Poptarts into your cart.
Buy 3 get the 4th free
It’s been proven over time that consumers are more responsive to the concept of “free” stuff than they are to saving a percentage off individual items. This is why “Buy X Get Y FREE” sales have proliferated. And free certainly sounds great, until you remember that you are actually spending money and nothing is really free.
Here’s a trick to help counteract this phenomenon: figure out what your “savings” would look like as a percentage. Take the total regular price of all the items and subtract out the value of the “free item.” Now divide the price you paid by the full cost of what you got and subtract that percentage from 100. For example, if you bought $85 worth of clothes and got a $15 belt out of the deal, that’s equal to a 15 percent savings. Would you have bought all of that stuff (belt included) if it was just on sale for 15 percent off?
Priming the well
Priming is popular at high-end restaurants, but is used at all kinds of stores. Essentially, you “prime” your customers by first showing them a very expensive item. Your intent is not to sell them the expensive item, but to instead make everything else look reasonable by comparison. If you walk into a mattress store and the first option you see is $10,000, that $2,000 suddenly looks like a steal. Just because something isn’t the most expensive option doesn’t mean it’s the best.
Closing the trap
Another strategy, similar to priming, is for stores to offer three or more options in a category. One option will be almost prohibitively expensive. Another option will be too cheap and shoddy to be any good. That leaves the middle option, which looks good from both a functional (“It’s gotta to be better than the cheap one”) and financial (“It’s way cheaper than the expensive one”) perspective. The middle option is the only one the store is really interested in selling. In this case, it’s wise to always remember that just because an item looks good relative to the other items on the shelf doesn't mean you should buy it.
Decoy pricing is most popular in fast food restaurants, but can be used almost anywhere. Here, you create multiple versions of a product, where one is the version you’re actually trying to sell, and the others are just decoys designed to make the preferred product look better.
A decoy could be a medium soda at the movie theater – it’s half the size of the large, but only $0.25 cheaper. Or it could be a version of a smartphone with half the memory and significantly less functionality, which costs 85 percent of the “real” phone. The point is not to sell you the decoy, but to make you feel like the large tub of soda and the fancy, top-of-the-line smartphone are actually the savvy, financially-responsible choices. They may or may not be, but don’t let yourself be manipulated.