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.