Buyer beware…

Interesting ‘tricks’ of the trade…

From Money Talk News.

If you automatically reach for a $39.99 sweater or load up
on $11.99 albums on iTunes, you’re not alone. The strategy
of ending prices with 99 cents has worked its magic on all of
us. Merchants use a variety of strategies to get us to spend
more – from labeling prices without dollar signs to setting a
per-customer limit. These practices are used with all kinds of
products, including clothes, food, toys, cars and houses.
Whether you’re shopping for the holidays or for everyday
items, it’s easy to fall for simple pricing tricks, warns Money
Talks News money expert Stacy Johnson: While you
probably don’t stop to consider the pennies on a price tag, let
me assure you, your friendly merchant does. Here are seven
common pricing traps – and how to avoid them.
1. Prices ending in ‘9,’ ’99’ or ’95’ – Known as “charm
prices,” tags that end in “9,” “99” or “95” make items appear
cheaper than they really are. Since people read from left to
right, they are more likely to register the first number and
make an immediate conclusion as to whether the price is
reasonable. When professor Robert Schindler of the Rutgers
Business School studied prices at a women’s clothing store,
he found the 1 cent difference between prices ending in
“.99” and “.00” had “a considerable effect on sales,” with
prices ending in “.99” far outselling those ending in “.00.”
This works to the last digit on a product as small as a $1.29
iTunes download. But it’s also effective on anything from a
pair of jeans to a car or house. Homes selling for $299,000
often sell faster than those costing $300,000. The reason?
It’s under, rather than at, the upper limit of those shopping
for houses in the $250,000 to $300,000 price range. Pricing
that doesn’t end in “9” also tells our minds a story. If a price
ends in “4” or “7,” for example, it’s likely to stand out
because it doesn’t end in “9.” And it subliminally suggests
the seller has seriously considered the price.

2. Dollars without cents – If you see prices stated as whole-
dollar amounts and no change, the retailer or restaurateur is

sending the message that you’re in a high-end place. The
implication is that if you’re concerned about pocket change,
you should move on.

3. Prices without dollar signs – In a Cornell University
study, guests given a menu with only numbers and no dollar
signs spent more than those who received a menu with either
prices showing dollar signs or prices written out in words.
The same tactic translates to retail stores. When items are
marked “20” without the dollar sign, retailers are hoping
customers won’t associate the amount with money. Thus,
they will be less likely to keep a running tally of how much
they’re spending as they shop.
4. ‘10 for $10’ trick – Stores push deals like “10 for $10,”
aiming to get shoppers to buy items like soup, cereal, etc., in
bulk. But here’s something stores don’t advertise: You don’t
always have to buy in bulk to get the deal. In many cases,
you can just as easily buy one for $1. Ask your retailer
before loading up your cart.
5. Per-customer limits – When stores add limits to products
– like “limit four per customer” – it tricks shoppers into
thinking the product is scarce, the price is low or both. It
also gives the impression of big demand. You find yourself
buying several – when you would normally buy just one – to
avoid missing out.
6. ‘Free’ promotions – Retailers know “free” is the magic
word. So, they roll out deals like “buy one, get one free,”
sometimes persuading us to buy things we normally
wouldn’t. Free-shipping incentives requiring us to spend at
least a certain amount of money also draw us in.
7. Simple prices – Simple prices, especially on products
susceptible to future markdowns, allow shoppers to quickly
compare how much they’re saving. It’s easy to compute the
discount on a product originally priced at $50 that now costs
$35, as opposed to an item originally priced at $49.97 that is
now on sale for $34.97.
The bottom line – The psychology of shopping affects
virtually everything you buy. These tricks are so simple, it’s
easy to believe you’re too sophisticated to fall for them.
However, odds are that you do – and so do millions of other
people. Otherwise, retailers wouldn’t use these practices.
But being aware they exist – and work – may help you
overcome them, and make you a smarter shopper.


Comments

Buyer beware… — 16 Comments

  1. The words “It’s free!” always makes Heinlein’s TANSTAAFL acronym pop up in my mind.

    Good post.

  2. I have had any number of discussions with friends, relatives, and strangers about gas prices. When I see a sign that says 274.9 I quote it at 275. I am amazed by the number of people that will argue with me that it is not 275 but 274. Since I learned the rounding rules for decimal numbers in 4th grade I sincerely worry about the mathematical knowledge of the US public.

    • Yep. I’ve been rounding up those prices for so long, it’s automatic. Teaching the kids to do the same.

  3. BOGO (Buy one – get one free) is another tactic. Gives the seller a chance to quickly rid their inventory of products which aren’t worth the price of the original.
    sounds like a great deal, but the buyer often forgets the extra and buys a replacement before remembering the spare.

  4. When I was growing there was a local furniture store that was always discounting prices. The “full retail” price was prominently displayed and then the discount price on the same tag. The thing was, the discount prices was about what the item was selling for at their competitors, The “full retail” price was highly inflated. This same store had a “going out of business sale” every six months or so, when they actually went out of business, no one noticed.

    • That’s pretty much a furniture store thing. There were two in my little town with “GOING OUT OF BUSINESS SALE” permanently lettered on the windows…

      I also noted that their “sale” prices were the same or higher than their competitors’ full price.

  5. Reminds me of the days spent retailing used cars.

    My favorite, scrawled on the windshield in dayglow marker, “In inventory over 90 days – Boss saves it must go! Was $7999, now $5999”. (on the books for $3,000)

  6. All- Agree with your comments!!! My cousin worked for quite a few years in a high end dress shop after she retired from teaching, what I called a tea and crumpets place… She accompanied the owner to NY and Dallas to buy dresses etc. 6 months ahead. If they paid $100 for a dress, they charged $300! The ‘markdown’ was to $200…

  7. Since I took maths, well, until advanced calculus broke my brain (sorry, Robert Anson H., but I canna handle the big maths) I never fell for all that hookum and humbug, flim-flam and trickery.

    Now, I will scour stuff on the clearance section, if they’re clearing it out for expiration date reasons, as that is a ‘cheap’ way to try new stuff, especially gluten-free (wife has celiac’s, so she’s g-f for a real reason.)

    And it always peeves me off when I see 10 for $10, when I know last week the item was 99 cents.

    And then there’s the trickery of convenience packages. See this especially in 4 packs of soup, where 1 4-pack is $3.59, when each individual can is 85 cents. Yeah, like I can’t do simple math in my head. Yeesh.

    I do love freaking people out at the stores when I am able to do math without a phone, calculator, blackboard, whiteboard, or pencil and paper, but all in my head.

    I miss the days when math was taught properly so if one graduated the 8th grade, one could do ‘numbers and figures’ without mechanical (or electrical) aids.

    Sigh.

    And then there’s the taxes on land-phones and tv cable. Oh, the price is only X amount! You’ll save Y this year. But, when all the taxes are added on, you actually pay X times 2, or even more. (at least with gas prices the quoted amount is with local, state and federal taxes, not so much on other utilities like electricity, phone or cable. Grrrr….)

    • Beans – I miss the days when plain old arithmetic was more than enough for most all everyday tasks – long before it became “maths” (much less that common core ‘stuff’ that is now being foisted on unsuspecting kids) 😉
      BTW, we didn’t HAVE electronic calculators when I was in the 8th grade – we did have slide rules though.
      BTW, I managed to survive yet another week without algebra, trigonometry or calculus.

    • Back when I still went to Wal-Mart I often noticed that items which cost $13.99 two weeks before were now “on sale!” for $17.99…

      Something a number of local retailers – department stores, hardware stores, grocery stores – do, is to have displays of items with no price. The laws on “retail price” vary by state; here, they’re obliged to sell at the marked price even if incorrect, but they can charge anything they want for items with no price at all.

      I still find it hard to believe people fall for that one, but it seems increasingly common.

  8. Beans- Yeah, those ‘deals’ usually aren’t… And don’t get me started on the taxes… #$(*($

    Posted from my iPhone.

  9. I can remember back many moons ago when I work in a convenience store
    the big promo that moth was 25 cent Hershey Bars.

    They were not selling until I made a sign 4 for $1.00 we sold out of Hershey bars in by the end of my shift.

    • Bah! Here it’d be one for 25c, or three for a dollar!

      And people would bite on the threefer every time…

  10. One of my supervisors worked at a Woolworths as a teen. I’m thinking it was the late 40’s, early 50’s. They sold white dress shirts for $2.50. When they wanted them to move, they’d put up a sale sign that said “2 for $5.00″…and they’d sell out every time.

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