Beware of These Pricing Tricks That Retailers Use to Trick Your Brain
Retailers are damn good at inventing gimmicks to separate us from our money. Whether it’s the price points they choose, how they sell their products, or discounting techniques, they are experts in how to get into our brains and influence our buying decisions. Here are some of the most popular tricks retailers use, as well as some easy ways to fight back.
Bait pricing makes less expensive items look like a bargain
Spoof pricing is used by retailers to nudge you into buying a particular model that increases their bottom line. The folks at Apple have used this strategy for years to get consumers to spend money on products that seem to be more profitable than more expensive models. For example, they currently manufacture the Apple Watch in thirty-eight different designs, priced from $ 349 to $ 17,000. The ultra-expensive versions will never be top sellers, but that’s okay – that’s not their job. Their job is to make the $ 349- $ 549 versions look really good compared to them. Consumers who might otherwise scoff at the idea of paying over $ 300 for a smartwatch may not scoff as much when the alternative is $ 17,000. To avoid pricing gimmicks, first think about your real needs and then find the best version of the product that suits them.
High-Low Price Increases Price Knowing You Will Use Coupon
High-low pricing occurs when retailers set a relatively high “everyday price” for items and then often lower their prices through coupons and sales events to create the impression that you are closing a critical deal. While they will never admit it, they never expected you to buy the item at the original price, and if you do, it will work for them. You will often see high-low prices from retailers such as JCPenney, Kohl’s and Ann Taylor.
This isn’t just a brick and mortar ploy. Many websites, including American Eagle, Gap, and Banana Republic, are also guilty of setting high or low prices . Right before the coupon code is released, they are inflating prices to full retail to make it look like your coupon is giving you a great deal. In reality, the mass sales that are consistently run on many websites provide more savings than the actual coupon code. At the very least, make sure you can combine a coupon with a sales price to maximize your savings and eliminate pricing entirely.
Dynamic pricing determines the amount of payment based on your purchase history
Dynamic pricing occurs when retailers use your browsing and purchase history and even your physical location to determine how much they should charge you. Basically, they try to determine your ability to pay based on generalizations such as how often you pay full price, what types of items you browse, and how rich your zip code is. Dynamic pricing has been used in one form or another by online retailers like Amazon , Orbitz , Staples, and Home Depot to maximize their bottom line.
If you think that the price a site is trying to charge you is changing randomly, you are probably confused. Test your theory by viewing the page in incognito mode or by disabling third-party cookies and then check to see if the price has changed. By doing so, the site will not be able to exploit your spending habits and charge you accordingly. You can also check the price on your mobile device to see if it has changed. Prices for some sites will differ depending on whether you are viewing them on mobile, Mac or PC. Also, do a quick price comparison to make sure you’re getting the best price available – which you are already doing anyway, right ?
Prestigious prices make you think that higher prices mean higher quality
This is a common pricing strategy that makes you think that since the price is high, it must mean that the quality is superior to the cheaper versions. Sometimes this is true , but sometimes it is not. Relevant examples include perfumes, jewelry, and even new cars. When we find an inexpensive or discounted perfume, our first reaction is usually to wonder what is wrong with it, and we often go for the full price version. In addition, many car manufacturers will use prestigious prices when creating a luxury lineup. Think Nissan and Infiniti: both are built on the same chassis and engine, but the Infiniti lineup has a higher “prestige” price point based on a few extra bells and whistles.
Dr.Anna Akbari, a sociologist and entrepreneur, explains that prestigious pricing is often accompanied by celebrity endorsements and usually discards the penny and decimal in the price as they tend to symbolize a deal in the minds of shoppers. The best way to avoid this pricing trick, especially when making a big purchase, is to always do your research first. Read user reviews of a product to determine if its prestigious price in terms of overall value is worth it to you, or just a status purchase. In many cases, the cheaper version will suffice.
Charming price makes you think the price is lower than it actually is
This is obvious: whenever you see an item priced at $ 19.99 or $ 4.97, retailers try to trick your brain with an “adorable price” by marking prices just below the round number. As we read from left to right, we see the first number in the price and immediately decide if the price is acceptable. According to a study by the Journal of Consumer Research , this “left digit effect” has a significant impact on buying decisions at the point of purchase. Whenever you see a price starting at 0.99 or 0.97, round up in your head before deciding if it’s worth it.
Pricing “Open Wallet” depends on whether you buy unnecessary items
Have you ever noticed the intricate storefronts at the entrance of many retail stores that sell discounted merchandise? All the things that you did not intend to buy, but clearly cannot live without them at the stated price. The sole purpose of these displays is to entice you to save money in the hopes that you will open your wallet wide and buy much more from the store at full retail price. In the end, think about all the money you’ve saved and how those savings give you the right to spend a little. This is psychological warfare and your money is the target. Target, Macy’s, Old Navy and Walmart are just a few of the popular stores infamous for their displays. If you know how stores decorate their windows, you can walk past by focusing on what you entered the store to buy first.
Everyone loves good deeds, but it’s important to make sure you are actually making real deals. Remember how retailers try to trick you with pricing. You will be able to easily spot and avoid the gimmicks of the trade, and make real deals more often.