We cannot live without doing at least a bit of shopping. Whether it is grocery shopping or a shopping spree to freshen up our wardrobes, we all do it. If you are like most of the people out there, you read the price tags on the things you buy, but you most likely don’t think too much about it.
You most likely don’t think how the .99 ending or how the .97 ending came up and whether or not it is actually influential for your shopping activity. And if it says it’s on sale, you probably don’t even think if that bargain is actually a bargain at all. You most likely simply make the purchase and pay at the checkout.
However, you might be surprised to learn that pricing and marketing experts are using a really wide range of techniques mean to influence us all. Following, we will present you with some of these techniques, so that you can decide for yourself if you should really buy an item in the future or if its “sale” is just another “trick” meant to lure you into buying more.
Offering You Three Options to Choose From
This is usually a technique used with subscriptions and other similar purchases and it sometimes comes under the name of “decoy pricing” as well. Basically, what pricing experts do here is offering you with three options to choose from, instead of only two – the third one being there just to offer some sort of “contrast” for you.
For instance, you will have the option of a subscription that includes the online newspaper only (and it will be the cheapest), an option that includes the “offline” newspaper only (and it will be the most expensive) and an option that includes both the online and the offline newspaper (and it will come – at least roughly – at the same price as the second option). Most people will go for the third option because they will feel that they are getting a “bonus” as compared to the second one.
While it is not fully necessary to avoid this technique used by pricing experts, you might want to think twice before settling on anything. Think of whether or not the “third option” would really provide you with any kind of value – and if it doesn’t, go for the cheapest one to save some money.
Offering You Prices Ending in Number 9
This is a very common technique and it is quite likely that you have spotted it before as well. Everywhere you go, from supermarkets to clothing stores and electronics stores, you will see prices ending in “9”. Most likely, you have noticed this and you will always know that $9 is almost the same as $10 and that you are not actually saving anything.
And yet, there is some sort of magic surrounding this number. Studies show that pricing products with numbers that end in “9” has led to boosting sales with an average of 24% (and this came out in no less than 8 studies made from 1987 to 2004!).
A very good example as to how the “magic” of this number works is an experiment researchers did. When a product was reduced from $48 to $40, the sales were boosted, but not as much as they were when the same product was reduced to $39 from the same initial price.
“Magic” is a very accurate word to describe what happens with the famous “number 9”, especially since researchers have not actually been able to explain it. We are all able to make easy round-ups, but when it comes to “9” and price tags, we seem to simply forget everything we learned in elementary school…
The Anchoring Technique
If you have ever entered a rather expensive store, you probably noticed how items that are quite basic on the surface have real big price tags. And yet, we are all very happy to buy them all. Of course, a brand’s celebrity has a good role to play in this, but our willingness to pay more for basic items may be related to another technique as well…
Put simply, the anchoring technique is a tactic used by price experts when they put a very expensive item very close to a less expensive one. For instance, if you will see a watch that costs $9000 near a skirt that costs $99 (yes, the “number 9” again), you will most likely be tempted to believe that the skirt is not expensive at all – even if you can find a similar design in another store at half of that price.
When you go out shopping next time, think well about this and think well if an item is really worth its price. Look after “contrast”-priced items as well and be aware of the fact that they are very intelligently placed near the less expensive items precisely because it will make you more willing to spend more in that particular store.
Pay Whatever You Want
Now, this technique sometimes works splendidly in convincing us to buy certain things, but it can sometimes be quite tricky as well (both because we would naturally be tempted to believe that some sort of trick is in the middle and because we might ask for prices that are much too low – and that would not be profitable for the stores).
One famous example of a case when this worked out great is with Radiohead’s In Rainbows album. When they released it online in 2007, they told their fans that they are free to download and share the album with their friends and that they could pay for it as much as they believe it is worth it. Later on, it was released that Radiohead made more money with In Rainbows than it had done with any other album.
Influencing Our Perception of a Product’s Price
Sometimes, marketers and price specialists call for this means of convincing us to pay for their products and services. For instance, if you would subscribe to a certain service that costs $1 a day, you would do it much more happily than if you did the same thing with a service that costs $365 a year (which is basically the same).
Also, keep in mind that many times, we are influenced by the things surrounding the products we buy. For instance, we are more inclined to pay more for a beer when it is served in a fancy restaurant than when it is bought at the local mini-market. Also, we are more inclined to buy coffee from Starbucks (rather than coffee at the automated machine) because we are influenced by the atmosphere there, by the looks of the cup in which the coffee comes and by the other “external” factors.
This also works wonders for marketers around winter holidays. If you enter a mall around Christmas, you will find that each of the shops will try to lure you in with really beautiful windows, with scented candles that remind us of Christmas scents (cinnamon and apple for example) and with nice music playing in the background as well.
What to Look After in Price Tags?
So far, we have discussed about the various techniques pricing specialists and marketers may apply to lure us into paying (more) for a product. However, which are the basic things everyone should be looking after when in a store? Here are some shopping tips grouped according to the major shops out there:
- If you frequently shop at American Eagle Outfitters, look after products ending in .99 or .00 – they are your best deal in the store. On the other hand, prices ending in .95 are actually full price, even if you may be tempted to believe that those products are on sale.
- If you shop at BJ’s Wholesale Club, look after price tags that end in .90 or 00 because they are the “manager’s discount”. They will be reduced every week by 10% until they total savings reach about %60.
- At Costco, prices ending in .99 are usually the full prices for those particular products. Prices that end in .7 offer some sort of savings, but it is not always the best kind of saving you could get. Furthermore, products with prices ending in .00 are usually products that have been returned unopened and that are very frequently a great buy. Also, it is worth noting that generally speaking, any kind of price ending in something different than .99, .7 or .00 is a manager’s special or a manufacturer’s special and it is a good deal.
- If you want to shop at Home Depot, keep in mind that prices ending in .06 are usually on clearance and that they will stay this way for about 6 weeks. If they have not been cleared after 6 weeks, they will be sold at a new price, ending in .03 – and this is normally the very best price you can get in this shop.