24 ms·

The shady economics of ‘buy one, get one free’ deals

295 points by zzaner 8y ago

telesilla 8y ago
My local supermarket does this all the time to my great annoyance, I never thought about the mathematics of why they don't just discount the item. At least it's better than the kind of deals that abuses people's misundertandings of mathematics entirely, such as https://www.telegraph.co.uk/finance/personalfinance/money-saving-tips/10986643/Supermarket-fake-offers-in-pictures.html https://www.telegraph.co.uk/finance/personalfinance/money-sa...
- Shivetya 8y ago
  Here in the Southeast the grocery chain Publix is pretty much the BOGO chain, as in you buy stuff that is BOGO and take care otherwise. Their prices are standard fare for a chain grocery and the standard price of the item falls in line with other chains. Now for the most part any serious saver would BOGO and then hit up Wal Mart or Aldi to finish out their savings. One interesting note is that in general you don't have to buy two items as part of a BOGO, you can buy one at half price. Now this is not true as some manufacturers, namely Coca Cola, require the purchase to be made as described. Meaning if its buy two get one you must take all three. They even get silly with Publix in that there will be buy two get two with Coke products that, you guessed it, you have to have four of the product to get it at the price of two.
deleted 8y ago
[deleted]
ChrisSD 8y ago
> A coffee mug that usually sells for $10 + $3 S&H will go for $13, with FREE shipping. I actually prefer this. It's much better than shops that activity try to hide shipping costs until the last moment. Also it makes comparing prices quicker.
- dalai 8y ago
  On the other hand, if you want to buy two of them they cost $20 + $3 S&H or $26 with free shipping.
  - glastra 8y ago
    S&H is not always fixed-rate. In fact, "handling" two items should cost more. Shipping more weight should also cost more.
    - elcomet 8y ago
      More than one shipping cost, yes, but it should be less than twice the shipping cost. Otherwise you could just order the items separately.
    - qrbLPHiKpiux 8y ago
      I bet a lot of people do not take into account of the time, fuel, wear-and-tear of their car to go get their wares.
  - theli0nheart 8y ago
    Why is this surprising? Undesirable, sure, but shipping additional things costs additional money.
    - newnewpdro 8y ago
      That greatly depends on the things.
      - theli0nheart 8y ago
        What's your point?
        newnewpdro 8y ago
        That your generalization does not generally apply, especially in an era of extremely miniaturized popular goods. Consolidating the S&H into the item cost makes sense for a subset of situations sure, but there's a huge set where it's exploitive. Amazon orders for example often can amortize S&H costs by shipping a single package containing multiple items sharing a common origin. I'd argue that's true for a huge portion of Amazon orders. It's simply not a good generalization.
User23 8y ago
My mother always said "50% off what?" Obviously when the merchant sets the nominal "retail" price to whatever they want, they can set the discount to whatever they want too and maintain their profit margin. This is basic algebra solving for one variable given a desired "discount". It's amazing how effective it is though.
- ChrisSD 8y ago
  In the UK the Advertising Standards Authority (ASA) does regulate this to an extent[0]. I don't know if America has a similar agency. [0] https://www.asa.org.uk/advice-online/promotional-savings-claims.html https://www.asa.org.uk/advice-online/promotional-savings-cla...
- simonh 8y ago
  I'm only (vaguely) familiar with the rules in the UK, but they include tests to ensure the 'was' price was actually a genuine usual selling price. This includes tests that the 'full' price must have been in place for longer than the promotional period, that it must have been recent and that significant sales were made at that price. Buy one get one free also has to mean you get two equivalent or similar products. Compliance is also monitored and enforced. I'm not claiming it's perfect, but by and large over here you can have reasonable confidence these promotions are usually valid. Conversely my wife is Chinese. Over there 'buy one get one free' usually means something like buy one dress, get one flimsy, non colour-matching belt free.
  - thaumasiotes 8y ago
    I'd be pretty surprised if British law prohibited "buy a dress, get a belt free" promotions.
    - simonh 8y ago
      If you promote it as such, or 'free belt with every dress' then sure. You can't market it using the phrase 'buy one get one free' though.
  - 8y ago
consp 8y ago
Fortunately some of this (bloating the price just before a sale to cover the cost, note: e.g. day before) is illegal where I live. Though it doesn't stop shops from trying. It does give the customer some extra power. If for instance the shop fails to sell all stock and dumps it afterwards you can try to claim the difference as this falls under deceptive practices. The buy one get two variant is fine as long as there is actual profit to the customer and no shady 'you still pay the same but it looks different' offers.
- JeanMarcS 8y ago
  Same in France. So when sales time arrives, you can see some items prices rising up a week before (which is, de facto, legal as long as you do it in advance)
  - consp 8y ago
    True in some forms (in the Netherlands) but if you only sell it for a day for the increased price you could argue it is deceptive (Mediamarkt does this usually for a week before the sales which is apparently enough). What they used to do, raise the price on the day of the sale, is fortunately no longer allowed. The other trick being the use of the advised selling price (which is always way more than the actual value of the product) and go from there. What I usually see these days is that products get offered on sale which have not been sold before so there is no way of knowing if they offered it before for less. Though internet helps if you are in a shop and it sounds dodgy at best.
  - karambahh 8y ago
    The rules are slightly more complicated. You are only allowed to discount items already in stock a month before the start date[0] That's why the back of the shop is fully loaded by boxes a month before the sales period starts. The rules seem silly because it's an open secret, all companies jack up the price and stock up just before... but you'd be hard pressed to find actual proof: "I ordered 50k items to the supplier just 30 days before, I meant to buy only 50, fat finger mistake, so we had to discount them". "Yes, the reference price is based on the highest price we had on record among our 500 stores. Yes, I know it was more than twice the median price, fat finger mistake but hey, who does not make mistakes, 14€99 is too similar to 5€50..." [0]https://www.service-public.fr/professionnels-entreprises/vosdroits/F20566 https://www.service-public.fr/professionnels-entreprises/vos...
ocfnash 8y ago
I quite enjoy mentally parsing these "offers" in logically equivalent ways. E.g., "buy one get one free" as "only sold in units of two" or even "each purchase of one requires compulsory purchase of a second". As a child I remember considering the difference between "extra free" and "free" which I used to see on cereal boxes. Sometimes the box claimed "10% free!" but other sneakier boxes would claim "10% extra free!". The latter allows the marketer to quote the same nominal figure for a smaller absolute quantity.
- thaumasiotes 8y ago
  > Sometimes the box claimed "10% free!" but other sneakier boxes would claim "10% extra free!". The latter allows the marketer to quote the same nominal figure for a smaller absolute quantity. I'm not sure they're trying to be sneaky. The difference is too small for anyone to care about: - 10% free! (purchase price pays for 90% of the cereal) - 10% extra free! (purchase price pays for 91% of the cereal) (Also, it's the first option that indicates a higher unit price, not the second.)
  - ocfnash 8y ago
    Actually I think we're in agreement here: I didn't make it clear but the nominal figure to which I was referring was the magnitude claimed free. By saying "extra free" they get to write down 10% instead of 9%. I also agree the difference is small in this case but I'd argue: * Small wins are still wins. * The difference is not so small with bigger percentages. Imagine I decide to tweak my margins for a time and sell 1.5Kg of cereal for the price I previously sold 1Kg. I could say "33% free" (relative to old price) or "50% extra free".
- mcv 8y ago
  I strongly object to calling something "free" when you can't get it for free. If I'm required to purchase something to get it, it's not free. Things like "10% free" should not be allowed to be called that. It's a 10% discount. Free with the purchase of something else is also not free, as I'm still required to pay money.
- coredog64 8y ago
rlue 8y ago
What makes this really interesting is how living in an economy where prices are both set by the seller and non-negotiable causes consumers to equate asking price with value. As a consequence, BOGO feels like a better deal than one item at 50% off MSRP. A 50% discount is a change in the asking price; the value of this item must have depreciated in some way for the seller to want to get rid of it (e.g., this garment is going out of season), and the price I'm paying is a fair deal that I'm happy to accept because I don't need to indulge in extravagances. But in a BOGO deal, the asking price hasn't moved (or, as the article discusses, may actually be inflated); the fact that I paid full price means that it retains its original value, and the one they throw in is simply an enticement. In other words, I purchased an extravagance at full price, but it was a deal because I walked out with two. The amount paid is double the previous example's, but the perceived value is fourfold. This isn't even getting into the actual value of perceived value (cf. the sticker price of wine vs. its perceived quality). Really interesting stuff.
- pattle 8y ago
  > This isn't even getting into the actual value of perceived value (cf. the sticker price of wine vs. its perceived quality). Really interesting stuff. I fall foul of this trick quite a lot when food shopping. For example if I'm buying a box of cereals and I see one is priced at £1.80 and another is priced at £2.50 but is on sale from £3.50 I'll buy the more expensive one because I'm under the illusion that I'm getting a good saving and a better quality product. In actual fact though I've just spend quite a bit more for a marginally better, if not the same quality item.
  - maaaats 8y ago
    Even without discount on the more expensive one, it can be used as a marketing trick to make you buy more expensive. For instance offer three versions of a product: $1 branded as cheap/bad, $2 branded as good, $5 branded as luxury. The last one exists mainly to anchor the value of the $2 as also cheap and to make you buy it. If one only had the choice between $1 and $2, most people would choose $1 option.
    - 8y ago
deleted 8y ago
[deleted]
chippy 8y ago
> Most online clothing brands offer ‘free’ shipping, with the catch that you have to meet a minimum purchase amount (often $100) to qualify. Some 58% of consumers will add additional items to their cart — often things they didn’t originally intend to purchase — just to “save” $5 to $10 on handling fees. You will find people vigorously defending their behaviour when challenged on this. For example: Amazon Prime. Amazon Prime is a product that costs you money and makes you spend more money on Amazon, and yet people will defend their spending saying that they are "saving" money. The shipping is "free" but you have to spend £8 a month to qualify. If you don't spend at amazon during that month you are still down £8 (that's about £100 a year). If you spend something at amazon during the month you are still down the £8 in addition to the money spent at something. Amazon Prime is a shady product designed to get you to spend money at Amazon. As the article says often you will find the same product for lower in other places. You just need to do the sums. Another common defence we will see when people respond to this is "Oh I know it doesn't save me money, it's the convenience". Retailers love making their customers comfortable and not thinking about these shady offers. Imagine having millions of customers so happy they will pay more money to you and defending this very process. Now... there's also the shady dark patterns the company uses to sign you up for it and make it it harder for you to cancel, but that's another thing!
- nebulous1 8y ago
  You do get the streaming service too.
  - dspillett 8y ago
    This in itself is an irritation for some: the price went up when that was added and many don't use it at all. I hardly use it (my TV from Amazon connected to a PC with a graphics card from Amazon by an HDMI cable from Amazon won't play Amazon HD streams because of a licensing issue - if I want HD I need to get the content ahem elsewhere) though for me the price is still worth it for other factors.
- alexgmcm 8y ago
  I nearly always buy from Amazon though. I bought from some other online retailers and had bad experiences (stuff taking ages to arrive, customs fees,bad returns policy etc.) Plus you get Amazon Music and Amazon Video too - I never use them but still... It used to be a lot cheaper in Spain though to be fair, like 20 euro per year so it was a no-brainer.
legatus 8y ago
Does anyone know of a book (even better a textbook, if possible) detailing these strategies? This article is about the "BOGO" deal, I'm interested in reading about other kinds of these strategies, and why they work. If anyone has any recommendation, especially for more academic stuff (textbooks or papers), I would greatly appreciate it!
- joshvm 8y ago
  Not a textbook, but Freakonomics is in that ballpark. It's (un-) surprisingly hard to find academic information about this on Google because all the results are click bait articles about how to improve sales, rather than peer reviewed theory.
  - legatus 8y ago
    Thanks, I'll definitely look into Freakonomics. I agree it's pretty hard to find info on this topic from an academic perspective, and it's really unfortunate, as I believe it is important for the wider public to understand these tactics and why they work.
    - yitchelle 8y ago
      The book "Predictably Irrational" by behavioral economist Dan Ariely that was mentioned early on in the article is also a good read. It does not directly related to pricing strategy but provide good insight to the irrational decisions that we make, and the BOGO falls into that category. In a similar vein, I have just finished "Nudge: Improving Decisions About Health, Wealth, and Happiness" by Thaler and Sustein. This might be worth a look as well.
- feeboo 8y ago
  "Thinking, Fast and Slow" by "Daniel Kahneman" is a great book on these topics. There is a lot of info on how the mind can be tricked. I really recommend it.
dspillett 8y ago
Everything even vaguely commercial with the word "free" attached is shady. I'm in a minority here (I must be, otherwise it would stop being common because it wouldn't bring in enough marks) but I've grown cynical enough that the word actually puts me on guard and I go searching for the small print, or it just puts me off completely if I don't have time for the small print. It isn't just BOGO offers, anything free is suspect: * Just pay postage! (postage is nearly as much as the item costs on Amazon/eBay/others with delivery included, and it'll take up to six weeks for your item to arrive) * Do the Great North Run for free! (... plus a £320 charity pledge) * First month free! (if you don't cancel 27 days before the free month ends you'll be paying for the service for at least 6 months afterwards)
- chii 8y ago
  > * First month free! (if you don't cancel 27 days before the free month ends you'll be paying for the service for at least 6 months afterwards) yes, this is a terrible bait and switch - and should be illegal unless the fine print isn't so fine that nobody reads it.
  - tatami 8y ago
    I also had services where the free trial stopped working as soon as I cancelled. Which I did so that the trial doesn't spill over into an abonnement.
Vinnl 8y ago
I tend to make a conscious effort to ignore "deals". As far as I know, the one case in which a deal is actually advantageous as a consumer is when that deal encourages consumers to buy more of a certain product at the same time, and the merchant passing part of the scale and predictability savings on to the consumer. For example, if you buy tooth paste every now and then anyway, buying it at the same time as many others might make it cheaper to offer that tooth paste. Or for example having the option between essentially equivalent meal ingredients, more people cooking the same meal at the same time can allow for offering those ingredients more cheaply. In most cases, however, it feels like they only benefit the merchant, by manipulating the consumer to buy things they don't need, or more expensive things. I don't think the cost savings I'm missing out on by not making purchases in the first category outweigh the extra costs I avoid by also not making purchases in the second category. That said, I'd love to hear of more ways of how deals can actually benefit both consumer and merchant.
- deleted 8y ago
  [deleted]
- wdutch 8y ago
  there's a tactic called a loss leader where the merchant has a discount and sells a product at a loss to get people into the store (and hopefully buy other things that make them a profit). Loss leaders are pretty hard to spot unless you actually know the normal retail price
  - Vinnl 8y ago
    Right - I thought of mentioning it, but then decided it was part of the category "making me buy more expensive things". Presumably, I wouldn't have gone into that store otherwise, e.g. because it's more expensive. A similar trick is selling a certain product (e.g. an ingredient) at a loss, because it is often bought together with more expensive products (e.g. the rest of the ingredients of the typical meal). Of course, you could still benefit from this if you were to visit that store anyway, or would have bought those products anyway. However, that's still the case in my "ignore deals" strategy: I don't actively avoid deals, I just try not to use them as a reason to buy something.
tomeson 8y ago
The shipping is "free" but you have to spend $5 a month to qualify. If you don't spend at amazon during that month you are still down £8 (that's about £100 a year). If you spend something at amazon during the month you are still down the $5 in addition to the money spent at something. WWW.Geosalary.com
runyor 8y ago
This can be generalized to: Every time someone offers you a "deal of a lifetime" it's a deal that mostly benefits him. If it doesn't screw over a third person it usually screws you, and if it screws over someone else it still might screw you. That's why the smart man will find deals himself. E.g. instead of waiting for a prospect from a cars dealer that makes him a good offer, he will study what makes a good second hand car, when the prices of second hand cars are lowest and then he will go and make an offer to a caring owner of a car to become its second hand owner.
2T1Qka0rEiPr 8y ago
Minor comment, but I'm pretty sure in Ariely's experiment he dropped both prices by 1 cent (i.e. the Lindt became 14 cents), hence the drop was identical, but this completely shifted the purchasing decisions.
billpg 8y ago
My local pizza shop offers "Buy one get one free" and "Free delivery". They also offer a discount if you only want one pizza, and a discount if you collect instead of having it delivered.
- vxNsr 8y ago
  > and "Free delivery". I'd argue this is legitimate, or at least everyone is footing the bill when you request delivery. But that's no different than everyone footing the bill for having tables and chairs in the shop.
  - mikeash 8y ago
    A discount for getting it yourself is the same as charging for delivery, though. And “free” delivery never is, at least in then US where tips are expected.
    - vxNsr 8y ago
      Rarely is there a discount for getting it yourself. usually the price is the same and either they charge for delivery or they don't.
      - mikeash 8y ago
        The shop discussed in the original comment does it.
maaaats 8y ago
Up until 2009 in Norway, it was illegal to advertise products with unrelated additions ("tilgift"). Not strictly related, as here it's the same product. But this made it illegal to do promotions like "buy our car, get a free iPad", "buy this coke, get a chance to win prices". I think consumers wanted the law gone, as it looks like we missed out on deals other countries had. But it makes it harder to compare and tricks our brains.
- mcv 8y ago
  So even on an electoral level, consumers get fooled by this and want access to shady deals. That's going to make it really hard to get fair consumer protection laws. (Though maybe it's not surprising that people get fooled in politics.)
mojuba 8y ago
The shady economics of a non-functioning close button of an annoying "Subscribe to newsletter" popup. Bottom line: it works but also sends a negative subliminal signal to the visitors that a given business is desperate. Just something for website owners to have in mind.
- mcv 8y ago
  I increasingly tend to close popups on websites by deleting them from the DOM through dev tools. Not the most user-friendly method, but it's quite thorough.
  - mojuba 8y ago
    Doesn't always work though, some web sites also manage to block scrolling of the main content which may not always be easy to figure out (esp. on messy web sites with megatons of JavaScript code, HTML and CSS). And surely there are browser plugins that help you remove annoying DOM elements in one click?
    - icebraining 8y ago
      uBlock Origin has a visual picker, which also saves the blocking rule for future visits: https://github.com/gorhill/uBlock/wiki/Element-picker https://github.com/gorhill/uBlock/wiki/Element-picker
      - vxNsr 8y ago
        Only issue is the scrolling, how do I make a rule that blocks the inline js to prevent scrolling in the body elem. or worse when it's not inline.
        mcv 8y ago
        I usually look at the body element and start removing classes there. That often works. But I suppose a plugin should be able to figure out automatically why something isn't scrolling.
chrisdone 8y ago
I feel that there is a wealth/background effect here that could be studied somewhat too. I think people who don't have to worry about money are less likely to pay any attention to discounts and deals. Having come from a council estate, there is a certain mindset behind getting a deal for everything, making your little money go as far as possible, buy one get one free, or discounts on anything, or coupons to get into restaurants or discounted vacations, or companies that "get you deals" on all your electric, gas, TV, internet bills, 8 packs of cheap beer, etc. are all seen as victories and you are crazy for not taking advantage of them. There's an emphasis on getting more quantity for less money. That's easily exploited.
- tyfon 8y ago
  When my wife comes back from shopping I often jokingly ask her 'how much did you "save" today' and she laughs back. We're in a quite good position so it doesn't matter as much but it's often easy to get lost in the rebates and forget how much is actually spent.
  - chrisper 8y ago
    Also with these "deals" you often also have to ask yourself: Are you buying it because it is cheap or are you buying it because you need it? Often people buy stuff they don't need because it is on sale "right now."
    - tyfon 8y ago
      Exactly.. A good way to get around this is to keep a "wishlist" of things you actually need and then if there is a sale you can get it.
  - everdrive 8y ago
    I usually don't like language that suggests that consumers are brainwashed by marketing. But, getting people to comprehend that spending money =/= saving money is surprisingly difficult. Even when they understand money has been spent, it's not spent rationally: money "saved" at the grocery store doesn't actually mean less total money spent, rather the same amount as usual is spent, and more food than usual was able to be purchased. This is a fine tact if you're going for volume, but it's absolutely not "saving money."
kabacha 8y ago
I've been living in Thailand for a while now and the market is so unregulated and abused by these sorts of deals. A big super market near my house runs 2for1 buns every day for the past year. I've got desensitised to the point where I don't even see the "original price" anymore. The deal price is just the real and only price. The only real deals are the "almost expiring" price reductions super markets put out before throwing out old food. I wonder if in the grand scale of things this abuse backfires or I'm just a rare case as a foreigner.
- nickjj 8y ago
  Are regulations supposed to stop that behavior? There's plenty of grocery stores in NY that continuously run the same "special" on the same items. I've seen the same hot dogs on sale for the same price for a year.
  - vxNsr 8y ago
    Yes, there are laws about how long a sale can be, if a product is on sale for a significant amount of time the seller has to make that price the actual price and cannot advertise it as "on sale." Likely those stores run afoul of this law but are too small to be prosecuted by the DA/FTC.
- mrhappyunhappy 8y ago
  I don’t know if they are legit, but I was shocked by the number of furniture “liquidation” sales when I first moved to Southern California. It seemed every furniture store was closing and selling off inventory. After living in one area for a while it became clear liquidation was just a means of selling crap and reopening under a different name.
Proven 8y ago
Busybodies in action.. > But according to an industry insider, the goods we typically get in a BOGO deal are “low-demand, non-efficient, lacking in quality and/or close to the expiration date.” I pity their readership if it takes an industry insider to explain the mystery of lower prices. Wow, lower demand usually translates into a lower price. And while I'm at it, vice versa (fight for $15, yeah!) What particularly pisses me off that these geniuses assume they know better than I when a deal is reasonable and when it's shit. In other words, they're smarter than I. And what follows from that fact is they ought to have the power to limit the seller's freedom of speech and my freedom to see and buy what I want. Thanks but no thanks. I find the article very insulting.
jacknews 8y ago
I thought it was known as BOGOF?
- klyrs 8y ago
  Payless Shoes is particularly egregious -- they have huge signs that say "BOGO" but then the fine print says... "buy one get one half-off." And their employees are apparently trained to say "buy one get one" until you arrive at the till.
dazc 8y ago
A friend once pointed out a deal on Coca Cola in one store where 2 bottles were actually cheaper than one single bottle. I reckoned the expensive single bottles were only there to convince you that you were getting a great deal? Coca Cola is, I think, the classic example of a product where fair cost has become irrelevant.
beefield 8y ago
Funny the title calls economics. But the textbook economics with its utility maximizing rational agents is utterly incapable even accepting the existence of this kind of phenomena, much less analyzing...
- chippy 8y ago
  would it be under game theory?
  - Matticus_Rex 8y ago
    There are papers modeling it in game theory, but you'll spend a lot of time on this in advanced micro, any behavioral or price economics classes, and any applied econ classes. The mythical textbook econ he's talking about is a meme.
- Matticus_Rex 8y ago
  Ah, the mythical caricature textbook economics that hasn't integrated bounded rationality or behavioral economics. Funny how I only find that in internet comments and not actual classrooms past 101 (which is too basic to get into this).
  - beefield 8y ago
    I may be too cynical, but I assume most MBA curricula do not contain bounded rationality ot behavioral economics at least as obligatory subject, but are happily restricting themselves to the world view of 101.
    - Matticus_Rex 8y ago
      Business programs LOVE behavioral econ. You get Nudge and cognitive bias stuff starting in undergrad business classes. And other than the econ classes, business classes aren't modeling behavior or doing much theory work, so they aren't making assumptions like rationality.
scraft 8y ago
Buying the right BOGOF items saves money. For instance, after spending a lot of time trying different options, I now know exactly what face soap I want and I also know the price it sales for. From time to time, it'll be sold as a BOGOF, so providing the price makes sense (i.e. it is the normal price or less than 200% of the normal price) then it is a good buy (it has long shelf life, and will always be used). I use up about 1.5 loaves of bread per week, so some weeks I buy one loaf, some weeks I buy 2. If it is a week where I only need one, but it is BOGOF I just buy 2 and put on in the freezer (and then take it out the following week). It is a similar story for cheese (although that doesn't need to be frozen, staying in the fridge, sealed, lasts for long enough). One of the bigger savings we have got from a food perspective is to move towards making a 'menu' of food we are going to eat that week. Then buying the ingredients needed for each dish. This means little or no wastage (good on so many levels), being able to buy at a good price (rather than not getting something required then picking it up at somewhere convenient buy more expensive halfway through the week) and knowing the quantities up front makes it easier to either buy in bulk, or knowing when a deal that involves extra quantity will be suitable. The above approach has also meant eating much healthier food, not finding ourselves in a position where we order take away because we don't have anything in. Ensuring we have not only meals planned, but healthy snacks (fruit etc) factored in too. It isn't a binary choice of by doing this we get everything 100% perfect, but it has been a hugely noticeable improvement. I have read several times that some of these approaches and typically favoured by those who have more disposable income, which isn't ideal, as we really want those with less income to be getting all the good savings to try to ease/stop the wealth gap.
- austincheney 8y ago
  > I have read several times that some of these approaches and typically favoured by those who have more disposable income, which isn't ideal, as we really want those with less income to be getting all the good savings to try to ease/stop the wealth gap. The disposable nature of income is orthogonal to wealth. It is possible and common to be wealthy and still be broke. Consider the pro athletes earning 7-8 figure income that are still forced into bankruptcy. It is also unrealistic to think people who are weak at saving money need a nanny to follow them around and police their spending habits in an effort to close the wealth gap. The most straight forward means to close the wealth gap is to tax capital gains as regular income and incentive spending from the wealthy with a punishing estate tax.
jamiethompson 8y ago
I think the counter argument to this is non-perishable food and other groceries. There is a certain brand of shelf stable non-dairy milk that my family use a lot of. The usual price is £1.50 a carton. Every few months there is a 3 for £3.00 offer. Now this is obviously a ploy to get you to buy more than you needed and also to appeal to new customers. But I use these offers to stock up on weeks worth of the stuff. If has a shelf life of over a year so it's a no brainer. I hardly ever pay full price.
- mrhappyunhappy 8y ago
  I’m curious to know what’s happening with our supermarket ice cream discounts. Every Friday all ice cream is 50% off and as you’d expect a lot of people buy their ice cream on a Friday. The rest of the week it’s full price. Does that mean they are taking a profit hit on Friday just to move inventory or is the ice cream marked up higher than their ideal selling price which would be the standard profit margin they expect on Fridays? Not sure...
  - Matticus_Rex 8y ago
    They're using it as a loss leader: taking a cut in profit or even a loss to pull people into the store, where they're likely to buy more than enough to make up for it.
  - aembleton 8y ago
    It's full price the rest of the week so that on Friday it looks like a good deal. How do you know what the actual value is? You only know its value from the price charged during the rest of the week.
  - Spivak 8y ago
    You would have to have some insider knowledge to know for sure because both options are possible. But regardless if something is a loss-leader or not I typically shop with the rule that any item that routinely goes on sale for $x has a true price of at most $x.
vxNsr 8y ago
One way to combat this mentally is to have set prices for things in your head... ie the price you feel each commodity should cost. Don't buy things that deviate to far from that price. For example I feel a nice non-iron, fitted, button down shirt shouldn't cost more than $20, so I only buy when I see them at, or around that price, BOGO or not (and I need one/two). Same goes for lightning cables, I'm not paying more than $5/(10ft)cable no matter what material it's wrapped in.
- aembleton 8y ago
  Where do you get the idea that the shirt should cost $20? Is that from the prices you've seen at retailers? The same ones that run BOGOF promotions.
flavor8 8y ago
We're staying in Nashville overnight on our way somewhere else and enjoyed walking around on a weekend evening. We noticed that all of the stores selling cowboy boots (and there are multiple) have a "buy one get two pairs free" offer. All boots in the store we checked out seem to be priced at $300+. So, instead of simply offering discount boots at ~$100, they're leading you to think you're getting $300-quality boots and $600 of "free" value in the extra pairs. Framed like that, who could possibly refuse?
afpx 8y ago
I’m very interested in knowing what proportion of retail revenue comes from these types of dark patterns. Is it even possible to come up with a number? If so, I’d be willing to help fund the research. The other day a friend and I were discussing the “take X% off your entire order” coupons. These seem to be very common, lately. She mentioned that she recent used one on a cart of $100 in items. She expected a $20 discount. But, to her surprise, she only received $2 off. Apparently all but one of her items were ‘restricted’ items. It seems like many companies find it easier to trick people than to actually provide great service or products.
- tyingq 8y ago
  "Free shipping" is a funny one. For smaller businesses, it's basically subsidizing far away customers with nearby customer money. I offer it not because I want to deceive people, but because we sell more that way. People like predictable upfront prices without having to tell anyone their location. It is, of course, not "free". We just calculate the average shipping cost and pad the price.
  - ghaff 8y ago
    Part of it is that "free shipping," at least over a fairly modest purchase dollar amount, has become so prevalent from most large retailers that dealing with a shipping charge that's unknown going in and/or that gives sticker shock checking out turns a lot of people off.
    - ip26 8y ago
      The lack of free shipping can also be a clue that this retailer sends $3 widgets via $20 FedEx, or this moderately large item will be $100 freight. In other words, free shipping sellers work hard to find cheap shipping. Those that do not offer free shipping seem less inclined to do so.
  - hopler 8y ago
    How much does shipping cost actually vary? I always assumed that first//last mile handling of a package dominates over the fuel/depreciation cost share of driving the item farther.
whoopdedo 8y ago
A related and greater rip-off is the discount cards that give you coupons after a purchase. Consumers become addicted to these "deals" that make it seem as if they're paying a very small amount for something. When in fact they paid up-front with the original overpriced purchase. It amounts to an interest-free loan to the retailer that is paid back to you with those coupons.
- chippy 8y ago
  These cards are the original data tracking example as by using the cards you give the retailer all your data including demographics of your age and location etc. From what I recall retailers cannot use your credit card purchase history for this, you have to use opt in and use the "loyality" cards.
ocdtrekkie 8y ago
This article of course totally ignored the scenario where the buyer is aware of the going rate for a given item, and either stocks up when a sale happens or waits until the price point they want to pay. The article basically is suggesting "deals are bad" instead of what it should be saying, which is "don't fall for bad deals".
- ianai 8y ago
  I agree, in the mane. But I think their point isn’t for people who target a specific good or service but who instead suddenly enter a market (purchase something they wouldn’t otherwise purchase) because of a BOGO deal. Quote “”Retailers are often as guilty as you can get with manipulating price of an item,” says Cohen. “You’re often charged a price that nobody has ever paid; anything that’s free is just carved off the regular price.””
richpimp 8y ago
I recently went to a department store called Kohl's for the first time with my wife, who'd been shopping there for years. For those unfamiliar with this store, think something similar to a JC Penney's. What struck me was that above every item was some digital signage showing a discounted price or promotion (B1G1 Free, 25% off, etc.), along with the MSRP price. So basically, anything I looked at seemed like a great deal. They also have a rewards program whereby you get "Kohl's cash" whenever you reach some threshold for purchases (something like $5.00 Kohl's cash for every $100 spent), which effectively gives you a discount. Of course, I soon realized that this was all simply a tactic to encourage people to continue to spend their money in the store, an effective one at that. The "sale" price was really no different than the standard price at any other retail store. It was just the perception of getting a good deal and triggering the dopamine receptors in the brain. I told my wife this, but her reaction was one of incredulity. Her thinking was she was saving money by shopping there. It's such a simple, yet brilliant tactic. Make people feel like they're getting a good deal, and they'll spend more money than they otherwise would.
samstave 8y ago
Tangentailly related; i recently needed to buy a new shirt, where in the past, i had shopped at Express for some work shirts - but havent been in their store in several years - i went in as they were having a 40% off store wide. Their shirts, which i used to have dozens of - are now priced at $69 per shirt... less 40% for this sale. Ive never paid $69 for one of their shirts in the past. So the 40% off now reflects what i ised to have paid. So i feel they raised the prices of their shirts, then hold frequent 40% off sales to lure in traffic of people thinking they are getting a great sale - only to pay what the full retail of the shirt used to be. So Express literally found a way to inflate sales of product through this tactic.
- tych0 8y ago
  JCPenny very famously nearly went out of business because they do this all the time, but then tried to revert to just pricing things normally. People thought they weren't getting deals any more, so they stopped going there.
- heywire 8y ago
  I like to call this the Kohl's model. I can't imagine anyone ever pays sticker price for anything in a Kohl's store. The prices are ridiculous. Purchase some socks and underwear and the cashier will gladly tell you that you saved hundreds of dollars. Compared to what?!
- gnicholas 8y ago
  And banana republic now sells hoodies with a list price of $130, presumable because they’re perpetually running 30% to 60% off sales.
skizm 8y ago
JC Penny almost went bankrupt when they tried to stop doing sales all the time and just charge fair prices. People want sales, even if the item isn't really cheaper.
hakfoo 8y ago
I suspect a lot of the BOGO deal structure is to exploit the consumer who intentionally buys only what he can use. Supermarkets here have gotten big on "buy one get (1, 2, or even 3) free" for large meat packages (racks of ribs, for example), but keeping the price tag high-- say $12 per pound. If you fully exploit the offer, you're effectively paying a bargain $3 per pound, but that requires a lot of fridge space to deal with four big packs of perishable meat. The consumer who says "I only need one or two" is being gouged for NOT wanting to throw rancid leftovers away. A similar related gimmick are the "buy N, save $M deals." If you buy any ten of a pool of random items, they knock off $10 from the order, but if you only need 9, or 1, you're paying full price. There's definitely been a swing from "everyday low prices" to "gimmicks and games." Everyday low price became "3-day sale" became "only with club card" became "only if you install our terrible app and explicitly select you want the promotion ADDED to your club card." I think the ultimate goal is to get where they can advertise aggressive discounts, knowing they don't have to give them to anyone but the people most willing to jump through hoops to get them.
- Spivak 8y ago
  So price discrimination. I don't see any problem with it. People who are the most price sensitive will jump through hoops and be rewarded for it.
lancesells 8y ago
I just read the book "Dollars and Sense" and recommend it if you're interested in this topic. It's kind of surface level but it does help explain the ways people spend and think about money.
HNLurker2 8y ago
This reminds me of that Elon Musk meme where you buy glasses by searching "x".the glasses are free but the transportation is like twice the price to male em
ksec 8y ago
I think we need to cite those Study were done in US. And the results are pretty much US specific. From my experience ( Retail is big, so it might not be applicable to every category ) Buy one get one free or anything with the word "Free" works in US, Works in UK, Kind of Works in EU, Doesn't work in Asia. Or At least most of the SEA, China, Japan, Korea etc. The consumer mentality is completely different, and in reality the 50% discount price would work better. Having it completely "Free" as the spend $12 Beer for Free T-Shirt example doesn't work in Asia as well. Because you would soon realise these market wont pay a $12 product to get a "Free" T-Shirt. It only works in Japan and Korea, and that also depends on the products. Generally Speaking, Discount is better than Free with Strings attached in Asia Regions. Pricing Strategy, Consumer Expectation and Product Selection is so vastly in every Asian Market are part of the many reason why many large Retailers failed in China.

295 points by zzaner 8y ago

My local supermarket does this all the time to my great annoyance, I never thought about the mathematics of why they don't just discount the item. At least it's better than the kind of deals that abuses people's misundertandings of mathematics entirely, such as https://www.telegraph.co.uk/finance/personalfinance/money-saving-tips/10986643/Supermarket-fake-offers-in-pictures.html https://www.telegraph.co.uk/finance/personalfinance/money-sa...

Shivetya 8y ago
Here in the Southeast the grocery chain Publix is pretty much the BOGO chain, as in you buy stuff that is BOGO and take care otherwise. Their prices are standard fare for a chain grocery and the standard price of the item falls in line with other chains. Now for the most part any serious saver would BOGO and then hit up Wal Mart or Aldi to finish out their savings. One interesting note is that in general you don't have to buy two items as part of a BOGO, you can buy one at half price. Now this is not true as some manufacturers, namely Coca Cola, require the purchase to be made as described. Meaning if its buy two get one you must take all three. They even get silly with Publix in that there will be buy two get two with Coke products that, you guessed it, you have to have four of the product to get it at the price of two.

deleted 8y ago

[deleted]

ChrisSD 8y ago

> A coffee mug that usually sells for $10 + $3 S&H will go for $13, with FREE shipping. I actually prefer this. It's much better than shops that activity try to hide shipping costs until the last moment. Also it makes comparing prices quicker.

dalai 8y ago
On the other hand, if you want to buy two of them they cost $20 + $3 S&H or $26 with free shipping.
- glastra 8y ago
  S&H is not always fixed-rate. In fact, "handling" two items should cost more. Shipping more weight should also cost more.
  - elcomet 8y ago
    More than one shipping cost, yes, but it should be less than twice the shipping cost. Otherwise you could just order the items separately.
  - qrbLPHiKpiux 8y ago
    I bet a lot of people do not take into account of the time, fuel, wear-and-tear of their car to go get their wares.
- theli0nheart 8y ago
  Why is this surprising? Undesirable, sure, but shipping additional things costs additional money.
  - newnewpdro 8y ago
    That greatly depends on the things.
    - theli0nheart 8y ago
      What's your point?
      - newnewpdro 8y ago
        That your generalization does not generally apply, especially in an era of extremely miniaturized popular goods. Consolidating the S&H into the item cost makes sense for a subset of situations sure, but there's a huge set where it's exploitive. Amazon orders for example often can amortize S&H costs by shipping a single package containing multiple items sharing a common origin. I'd argue that's true for a huge portion of Amazon orders. It's simply not a good generalization.

User23 8y ago

My mother always said "50% off what?" Obviously when the merchant sets the nominal "retail" price to whatever they want, they can set the discount to whatever they want too and maintain their profit margin. This is basic algebra solving for one variable given a desired "discount". It's amazing how effective it is though.

ChrisSD 8y ago
In the UK the Advertising Standards Authority (ASA) does regulate this to an extent[0]. I don't know if America has a similar agency. [0] https://www.asa.org.uk/advice-online/promotional-savings-claims.html https://www.asa.org.uk/advice-online/promotional-savings-cla...
simonh 8y ago
I'm only (vaguely) familiar with the rules in the UK, but they include tests to ensure the 'was' price was actually a genuine usual selling price. This includes tests that the 'full' price must have been in place for longer than the promotional period, that it must have been recent and that significant sales were made at that price. Buy one get one free also has to mean you get two equivalent or similar products. Compliance is also monitored and enforced. I'm not claiming it's perfect, but by and large over here you can have reasonable confidence these promotions are usually valid. Conversely my wife is Chinese. Over there 'buy one get one free' usually means something like buy one dress, get one flimsy, non colour-matching belt free.
- thaumasiotes 8y ago
  I'd be pretty surprised if British law prohibited "buy a dress, get a belt free" promotions.
  - simonh 8y ago
    If you promote it as such, or 'free belt with every dress' then sure. You can't market it using the phrase 'buy one get one free' though.
- 8y ago

consp 8y ago

Fortunately some of this (bloating the price just before a sale to cover the cost, note: e.g. day before) is illegal where I live. Though it doesn't stop shops from trying. It does give the customer some extra power. If for instance the shop fails to sell all stock and dumps it afterwards you can try to claim the difference as this falls under deceptive practices. The buy one get two variant is fine as long as there is actual profit to the customer and no shady 'you still pay the same but it looks different' offers.

JeanMarcS 8y ago
Same in France. So when sales time arrives, you can see some items prices rising up a week before (which is, de facto, legal as long as you do it in advance)
- consp 8y ago
  True in some forms (in the Netherlands) but if you only sell it for a day for the increased price you could argue it is deceptive (Mediamarkt does this usually for a week before the sales which is apparently enough). What they used to do, raise the price on the day of the sale, is fortunately no longer allowed. The other trick being the use of the advised selling price (which is always way more than the actual value of the product) and go from there. What I usually see these days is that products get offered on sale which have not been sold before so there is no way of knowing if they offered it before for less. Though internet helps if you are in a shop and it sounds dodgy at best.
- karambahh 8y ago
  The rules are slightly more complicated. You are only allowed to discount items already in stock a month before the start date[0] That's why the back of the shop is fully loaded by boxes a month before the sales period starts. The rules seem silly because it's an open secret, all companies jack up the price and stock up just before... but you'd be hard pressed to find actual proof: "I ordered 50k items to the supplier just 30 days before, I meant to buy only 50, fat finger mistake, so we had to discount them". "Yes, the reference price is based on the highest price we had on record among our 500 stores. Yes, I know it was more than twice the median price, fat finger mistake but hey, who does not make mistakes, 14€99 is too similar to 5€50..." [0]https://www.service-public.fr/professionnels-entreprises/vosdroits/F20566 https://www.service-public.fr/professionnels-entreprises/vos...

ocfnash 8y ago

I quite enjoy mentally parsing these "offers" in logically equivalent ways. E.g., "buy one get one free" as "only sold in units of two" or even "each purchase of one requires compulsory purchase of a second". As a child I remember considering the difference between "extra free" and "free" which I used to see on cereal boxes. Sometimes the box claimed "10% free!" but other sneakier boxes would claim "10% extra free!". The latter allows the marketer to quote the same nominal figure for a smaller absolute quantity.

thaumasiotes 8y ago
> Sometimes the box claimed "10% free!" but other sneakier boxes would claim "10% extra free!". The latter allows the marketer to quote the same nominal figure for a smaller absolute quantity. I'm not sure they're trying to be sneaky. The difference is too small for anyone to care about: - 10% free! (purchase price pays for 90% of the cereal) - 10% extra free! (purchase price pays for 91% of the cereal) (Also, it's the first option that indicates a higher unit price, not the second.)
- ocfnash 8y ago
  Actually I think we're in agreement here: I didn't make it clear but the nominal figure to which I was referring was the magnitude claimed free. By saying "extra free" they get to write down 10% instead of 9%. I also agree the difference is small in this case but I'd argue: * Small wins are still wins. * The difference is not so small with bigger percentages. Imagine I decide to tweak my margins for a time and sell 1.5Kg of cereal for the price I previously sold 1Kg. I could say "33% free" (relative to old price) or "50% extra free".
mcv 8y ago
I strongly object to calling something "free" when you can't get it for free. If I'm required to purchase something to get it, it's not free. Things like "10% free" should not be allowed to be called that. It's a 10% discount. Free with the purchase of something else is also not free, as I'm still required to pay money.
coredog64 8y ago

rlue 8y ago

What makes this really interesting is how living in an economy where prices are both set by the seller and non-negotiable causes consumers to equate asking price with value. As a consequence, BOGO feels like a better deal than one item at 50% off MSRP. A 50% discount is a change in the asking price; the value of this item must have depreciated in some way for the seller to want to get rid of it (e.g., this garment is going out of season), and the price I'm paying is a fair deal that I'm happy to accept because I don't need to indulge in extravagances. But in a BOGO deal, the asking price hasn't moved (or, as the article discusses, may actually be inflated); the fact that I paid full price means that it retains its original value, and the one they throw in is simply an enticement. In other words, I purchased an extravagance at full price, but it was a deal because I walked out with two. The amount paid is double the previous example's, but the perceived value is fourfold. This isn't even getting into the actual value of perceived value (cf. the sticker price of wine vs. its perceived quality). Really interesting stuff.

pattle 8y ago
> This isn't even getting into the actual value of perceived value (cf. the sticker price of wine vs. its perceived quality). Really interesting stuff. I fall foul of this trick quite a lot when food shopping. For example if I'm buying a box of cereals and I see one is priced at £1.80 and another is priced at £2.50 but is on sale from £3.50 I'll buy the more expensive one because I'm under the illusion that I'm getting a good saving and a better quality product. In actual fact though I've just spend quite a bit more for a marginally better, if not the same quality item.
- maaaats 8y ago
  Even without discount on the more expensive one, it can be used as a marketing trick to make you buy more expensive. For instance offer three versions of a product: $1 branded as cheap/bad, $2 branded as good, $5 branded as luxury. The last one exists mainly to anchor the value of the $2 as also cheap and to make you buy it. If one only had the choice between $1 and $2, most people would choose $1 option.
  - 8y ago

deleted 8y ago

[deleted]

chippy 8y ago

> Most online clothing brands offer ‘free’ shipping, with the catch that you have to meet a minimum purchase amount (often $100) to qualify. Some 58% of consumers will add additional items to their cart — often things they didn’t originally intend to purchase — just to “save” $5 to $10 on handling fees. You will find people vigorously defending their behaviour when challenged on this. For example: Amazon Prime. Amazon Prime is a product that costs you money and makes you spend more money on Amazon, and yet people will defend their spending saying that they are "saving" money. The shipping is "free" but you have to spend £8 a month to qualify. If you don't spend at amazon during that month you are still down £8 (that's about £100 a year). If you spend something at amazon during the month you are still down the £8 in addition to the money spent at something. Amazon Prime is a shady product designed to get you to spend money at Amazon. As the article says often you will find the same product for lower in other places. You just need to do the sums. Another common defence we will see when people respond to this is "Oh I know it doesn't save me money, it's the convenience". Retailers love making their customers comfortable and not thinking about these shady offers. Imagine having millions of customers so happy they will pay more money to you and defending this very process. Now... there's also the shady dark patterns the company uses to sign you up for it and make it it harder for you to cancel, but that's another thing!

nebulous1 8y ago
You do get the streaming service too.
- dspillett 8y ago
  This in itself is an irritation for some: the price went up when that was added and many don't use it at all. I hardly use it (my TV from Amazon connected to a PC with a graphics card from Amazon by an HDMI cable from Amazon won't play Amazon HD streams because of a licensing issue - if I want HD I need to get the content ahem elsewhere) though for me the price is still worth it for other factors.
alexgmcm 8y ago
I nearly always buy from Amazon though. I bought from some other online retailers and had bad experiences (stuff taking ages to arrive, customs fees,bad returns policy etc.) Plus you get Amazon Music and Amazon Video too - I never use them but still... It used to be a lot cheaper in Spain though to be fair, like 20 euro per year so it was a no-brainer.

legatus 8y ago

Does anyone know of a book (even better a textbook, if possible) detailing these strategies? This article is about the "BOGO" deal, I'm interested in reading about other kinds of these strategies, and why they work. If anyone has any recommendation, especially for more academic stuff (textbooks or papers), I would greatly appreciate it!

joshvm 8y ago
Not a textbook, but Freakonomics is in that ballpark. It's (un-) surprisingly hard to find academic information about this on Google because all the results are click bait articles about how to improve sales, rather than peer reviewed theory.
- legatus 8y ago
  Thanks, I'll definitely look into Freakonomics. I agree it's pretty hard to find info on this topic from an academic perspective, and it's really unfortunate, as I believe it is important for the wider public to understand these tactics and why they work.
  - yitchelle 8y ago
    The book "Predictably Irrational" by behavioral economist Dan Ariely that was mentioned early on in the article is also a good read. It does not directly related to pricing strategy but provide good insight to the irrational decisions that we make, and the BOGO falls into that category. In a similar vein, I have just finished "Nudge: Improving Decisions About Health, Wealth, and Happiness" by Thaler and Sustein. This might be worth a look as well.
feeboo 8y ago
"Thinking, Fast and Slow" by "Daniel Kahneman" is a great book on these topics. There is a lot of info on how the mind can be tricked. I really recommend it.

dspillett 8y ago

Everything even vaguely commercial with the word "free" attached is shady. I'm in a minority here (I must be, otherwise it would stop being common because it wouldn't bring in enough marks) but I've grown cynical enough that the word actually puts me on guard and I go searching for the small print, or it just puts me off completely if I don't have time for the small print. It isn't just BOGO offers, anything free is suspect: * Just pay postage! (postage is nearly as much as the item costs on Amazon/eBay/others with delivery included, and it'll take up to six weeks for your item to arrive) * Do the Great North Run for free! (... plus a £320 charity pledge) * First month free! (if you don't cancel 27 days before the free month ends you'll be paying for the service for at least 6 months afterwards)

chii 8y ago
> * First month free! (if you don't cancel 27 days before the free month ends you'll be paying for the service for at least 6 months afterwards) yes, this is a terrible bait and switch - and should be illegal unless the fine print isn't so fine that nobody reads it.
- tatami 8y ago
  I also had services where the free trial stopped working as soon as I cancelled. Which I did so that the trial doesn't spill over into an abonnement.

Vinnl 8y ago

I tend to make a conscious effort to ignore "deals". As far as I know, the one case in which a deal is actually advantageous as a consumer is when that deal encourages consumers to buy more of a certain product at the same time, and the merchant passing part of the scale and predictability savings on to the consumer. For example, if you buy tooth paste every now and then anyway, buying it at the same time as many others might make it cheaper to offer that tooth paste. Or for example having the option between essentially equivalent meal ingredients, more people cooking the same meal at the same time can allow for offering those ingredients more cheaply. In most cases, however, it feels like they only benefit the merchant, by manipulating the consumer to buy things they don't need, or more expensive things. I don't think the cost savings I'm missing out on by not making purchases in the first category outweigh the extra costs I avoid by also not making purchases in the second category. That said, I'd love to hear of more ways of how deals can actually benefit both consumer and merchant.

deleted 8y ago
[deleted]
wdutch 8y ago
there's a tactic called a loss leader where the merchant has a discount and sells a product at a loss to get people into the store (and hopefully buy other things that make them a profit). Loss leaders are pretty hard to spot unless you actually know the normal retail price
- Vinnl 8y ago
  Right - I thought of mentioning it, but then decided it was part of the category "making me buy more expensive things". Presumably, I wouldn't have gone into that store otherwise, e.g. because it's more expensive. A similar trick is selling a certain product (e.g. an ingredient) at a loss, because it is often bought together with more expensive products (e.g. the rest of the ingredients of the typical meal). Of course, you could still benefit from this if you were to visit that store anyway, or would have bought those products anyway. However, that's still the case in my "ignore deals" strategy: I don't actively avoid deals, I just try not to use them as a reason to buy something.

tomeson 8y ago

The shipping is "free" but you have to spend $5 a month to qualify. If you don't spend at amazon during that month you are still down £8 (that's about £100 a year). If you spend something at amazon during the month you are still down the $5 in addition to the money spent at something. WWW.Geosalary.com

runyor 8y ago

This can be generalized to: Every time someone offers you a "deal of a lifetime" it's a deal that mostly benefits him. If it doesn't screw over a third person it usually screws you, and if it screws over someone else it still might screw you. That's why the smart man will find deals himself. E.g. instead of waiting for a prospect from a cars dealer that makes him a good offer, he will study what makes a good second hand car, when the prices of second hand cars are lowest and then he will go and make an offer to a caring owner of a car to become its second hand owner.

2T1Qka0rEiPr 8y ago

Minor comment, but I'm pretty sure in Ariely's experiment he dropped both prices by 1 cent (i.e. the Lindt became 14 cents), hence the drop was identical, but this completely shifted the purchasing decisions.

billpg 8y ago

My local pizza shop offers "Buy one get one free" and "Free delivery". They also offer a discount if you only want one pizza, and a discount if you collect instead of having it delivered.

vxNsr 8y ago
> and "Free delivery". I'd argue this is legitimate, or at least everyone is footing the bill when you request delivery. But that's no different than everyone footing the bill for having tables and chairs in the shop.
- mikeash 8y ago
  A discount for getting it yourself is the same as charging for delivery, though. And “free” delivery never is, at least in then US where tips are expected.
  - vxNsr 8y ago
    Rarely is there a discount for getting it yourself. usually the price is the same and either they charge for delivery or they don't.
    - mikeash 8y ago
      The shop discussed in the original comment does it.

maaaats 8y ago

Up until 2009 in Norway, it was illegal to advertise products with unrelated additions ("tilgift"). Not strictly related, as here it's the same product. But this made it illegal to do promotions like "buy our car, get a free iPad", "buy this coke, get a chance to win prices". I think consumers wanted the law gone, as it looks like we missed out on deals other countries had. But it makes it harder to compare and tricks our brains.

mcv 8y ago
So even on an electoral level, consumers get fooled by this and want access to shady deals. That's going to make it really hard to get fair consumer protection laws. (Though maybe it's not surprising that people get fooled in politics.)

mojuba 8y ago

The shady economics of a non-functioning close button of an annoying "Subscribe to newsletter" popup. Bottom line: it works but also sends a negative subliminal signal to the visitors that a given business is desperate. Just something for website owners to have in mind.

mcv 8y ago
I increasingly tend to close popups on websites by deleting them from the DOM through dev tools. Not the most user-friendly method, but it's quite thorough.
- mojuba 8y ago
  Doesn't always work though, some web sites also manage to block scrolling of the main content which may not always be easy to figure out (esp. on messy web sites with megatons of JavaScript code, HTML and CSS). And surely there are browser plugins that help you remove annoying DOM elements in one click?
  - icebraining 8y ago
    uBlock Origin has a visual picker, which also saves the blocking rule for future visits: https://github.com/gorhill/uBlock/wiki/Element-picker https://github.com/gorhill/uBlock/wiki/Element-picker
    - vxNsr 8y ago
      Only issue is the scrolling, how do I make a rule that blocks the inline js to prevent scrolling in the body elem. or worse when it's not inline.
      - mcv 8y ago
        I usually look at the body element and start removing classes there. That often works. But I suppose a plugin should be able to figure out automatically why something isn't scrolling.

chrisdone 8y ago

I feel that there is a wealth/background effect here that could be studied somewhat too. I think people who don't have to worry about money are less likely to pay any attention to discounts and deals. Having come from a council estate, there is a certain mindset behind getting a deal for everything, making your little money go as far as possible, buy one get one free, or discounts on anything, or coupons to get into restaurants or discounted vacations, or companies that "get you deals" on all your electric, gas, TV, internet bills, 8 packs of cheap beer, etc. are all seen as victories and you are crazy for not taking advantage of them. There's an emphasis on getting more quantity for less money. That's easily exploited.

tyfon 8y ago
When my wife comes back from shopping I often jokingly ask her 'how much did you "save" today' and she laughs back. We're in a quite good position so it doesn't matter as much but it's often easy to get lost in the rebates and forget how much is actually spent.
- chrisper 8y ago
  Also with these "deals" you often also have to ask yourself: Are you buying it because it is cheap or are you buying it because you need it? Often people buy stuff they don't need because it is on sale "right now."
  - tyfon 8y ago
    Exactly.. A good way to get around this is to keep a "wishlist" of things you actually need and then if there is a sale you can get it.
- everdrive 8y ago
  I usually don't like language that suggests that consumers are brainwashed by marketing. But, getting people to comprehend that spending money =/= saving money is surprisingly difficult. Even when they understand money has been spent, it's not spent rationally: money "saved" at the grocery store doesn't actually mean less total money spent, rather the same amount as usual is spent, and more food than usual was able to be purchased. This is a fine tact if you're going for volume, but it's absolutely not "saving money."

kabacha 8y ago

I've been living in Thailand for a while now and the market is so unregulated and abused by these sorts of deals. A big super market near my house runs 2for1 buns every day for the past year. I've got desensitised to the point where I don't even see the "original price" anymore. The deal price is just the real and only price. The only real deals are the "almost expiring" price reductions super markets put out before throwing out old food. I wonder if in the grand scale of things this abuse backfires or I'm just a rare case as a foreigner.

nickjj 8y ago
Are regulations supposed to stop that behavior? There's plenty of grocery stores in NY that continuously run the same "special" on the same items. I've seen the same hot dogs on sale for the same price for a year.
- vxNsr 8y ago
  Yes, there are laws about how long a sale can be, if a product is on sale for a significant amount of time the seller has to make that price the actual price and cannot advertise it as "on sale." Likely those stores run afoul of this law but are too small to be prosecuted by the DA/FTC.
mrhappyunhappy 8y ago
I don’t know if they are legit, but I was shocked by the number of furniture “liquidation” sales when I first moved to Southern California. It seemed every furniture store was closing and selling off inventory. After living in one area for a while it became clear liquidation was just a means of selling crap and reopening under a different name.

Proven 8y ago

Busybodies in action.. > But according to an industry insider, the goods we typically get in a BOGO deal are “low-demand, non-efficient, lacking in quality and/or close to the expiration date.” I pity their readership if it takes an industry insider to explain the mystery of lower prices. Wow, lower demand usually translates into a lower price. And while I'm at it, vice versa (fight for $15, yeah!) What particularly pisses me off that these geniuses assume they know better than I when a deal is reasonable and when it's shit. In other words, they're smarter than I. And what follows from that fact is they ought to have the power to limit the seller's freedom of speech and my freedom to see and buy what I want. Thanks but no thanks. I find the article very insulting.

jacknews 8y ago

I thought it was known as BOGOF?

klyrs 8y ago
Payless Shoes is particularly egregious -- they have huge signs that say "BOGO" but then the fine print says... "buy one get one half-off." And their employees are apparently trained to say "buy one get one" until you arrive at the till.

dazc 8y ago

A friend once pointed out a deal on Coca Cola in one store where 2 bottles were actually cheaper than one single bottle. I reckoned the expensive single bottles were only there to convince you that you were getting a great deal? Coca Cola is, I think, the classic example of a product where fair cost has become irrelevant.

beefield 8y ago

Funny the title calls economics. But the textbook economics with its utility maximizing rational agents is utterly incapable even accepting the existence of this kind of phenomena, much less analyzing...

chippy 8y ago
would it be under game theory?
- Matticus_Rex 8y ago
  There are papers modeling it in game theory, but you'll spend a lot of time on this in advanced micro, any behavioral or price economics classes, and any applied econ classes. The mythical textbook econ he's talking about is a meme.
Matticus_Rex 8y ago
Ah, the mythical caricature textbook economics that hasn't integrated bounded rationality or behavioral economics. Funny how I only find that in internet comments and not actual classrooms past 101 (which is too basic to get into this).
- beefield 8y ago
  I may be too cynical, but I assume most MBA curricula do not contain bounded rationality ot behavioral economics at least as obligatory subject, but are happily restricting themselves to the world view of 101.
  - Matticus_Rex 8y ago
    Business programs LOVE behavioral econ. You get Nudge and cognitive bias stuff starting in undergrad business classes. And other than the econ classes, business classes aren't modeling behavior or doing much theory work, so they aren't making assumptions like rationality.

scraft 8y ago

Buying the right BOGOF items saves money. For instance, after spending a lot of time trying different options, I now know exactly what face soap I want and I also know the price it sales for. From time to time, it'll be sold as a BOGOF, so providing the price makes sense (i.e. it is the normal price or less than 200% of the normal price) then it is a good buy (it has long shelf life, and will always be used). I use up about 1.5 loaves of bread per week, so some weeks I buy one loaf, some weeks I buy 2. If it is a week where I only need one, but it is BOGOF I just buy 2 and put on in the freezer (and then take it out the following week). It is a similar story for cheese (although that doesn't need to be frozen, staying in the fridge, sealed, lasts for long enough). One of the bigger savings we have got from a food perspective is to move towards making a 'menu' of food we are going to eat that week. Then buying the ingredients needed for each dish. This means little or no wastage (good on so many levels), being able to buy at a good price (rather than not getting something required then picking it up at somewhere convenient buy more expensive halfway through the week) and knowing the quantities up front makes it easier to either buy in bulk, or knowing when a deal that involves extra quantity will be suitable. The above approach has also meant eating much healthier food, not finding ourselves in a position where we order take away because we don't have anything in. Ensuring we have not only meals planned, but healthy snacks (fruit etc) factored in too. It isn't a binary choice of by doing this we get everything 100% perfect, but it has been a hugely noticeable improvement. I have read several times that some of these approaches and typically favoured by those who have more disposable income, which isn't ideal, as we really want those with less income to be getting all the good savings to try to ease/stop the wealth gap.

austincheney 8y ago
> I have read several times that some of these approaches and typically favoured by those who have more disposable income, which isn't ideal, as we really want those with less income to be getting all the good savings to try to ease/stop the wealth gap. The disposable nature of income is orthogonal to wealth. It is possible and common to be wealthy and still be broke. Consider the pro athletes earning 7-8 figure income that are still forced into bankruptcy. It is also unrealistic to think people who are weak at saving money need a nanny to follow them around and police their spending habits in an effort to close the wealth gap. The most straight forward means to close the wealth gap is to tax capital gains as regular income and incentive spending from the wealthy with a punishing estate tax.

jamiethompson 8y ago

I think the counter argument to this is non-perishable food and other groceries. There is a certain brand of shelf stable non-dairy milk that my family use a lot of. The usual price is £1.50 a carton. Every few months there is a 3 for £3.00 offer. Now this is obviously a ploy to get you to buy more than you needed and also to appeal to new customers. But I use these offers to stock up on weeks worth of the stuff. If has a shelf life of over a year so it's a no brainer. I hardly ever pay full price.

mrhappyunhappy 8y ago
I’m curious to know what’s happening with our supermarket ice cream discounts. Every Friday all ice cream is 50% off and as you’d expect a lot of people buy their ice cream on a Friday. The rest of the week it’s full price. Does that mean they are taking a profit hit on Friday just to move inventory or is the ice cream marked up higher than their ideal selling price which would be the standard profit margin they expect on Fridays? Not sure...
- Matticus_Rex 8y ago
  They're using it as a loss leader: taking a cut in profit or even a loss to pull people into the store, where they're likely to buy more than enough to make up for it.
- aembleton 8y ago
  It's full price the rest of the week so that on Friday it looks like a good deal. How do you know what the actual value is? You only know its value from the price charged during the rest of the week.
- Spivak 8y ago
  You would have to have some insider knowledge to know for sure because both options are possible. But regardless if something is a loss-leader or not I typically shop with the rule that any item that routinely goes on sale for $x has a true price of at most $x.

vxNsr 8y ago

One way to combat this mentally is to have set prices for things in your head... ie the price you feel each commodity should cost. Don't buy things that deviate to far from that price. For example I feel a nice non-iron, fitted, button down shirt shouldn't cost more than $20, so I only buy when I see them at, or around that price, BOGO or not (and I need one/two). Same goes for lightning cables, I'm not paying more than $5/(10ft)cable no matter what material it's wrapped in.

aembleton 8y ago
Where do you get the idea that the shirt should cost $20? Is that from the prices you've seen at retailers? The same ones that run BOGOF promotions.

flavor8 8y ago

We're staying in Nashville overnight on our way somewhere else and enjoyed walking around on a weekend evening. We noticed that all of the stores selling cowboy boots (and there are multiple) have a "buy one get two pairs free" offer. All boots in the store we checked out seem to be priced at $300+. So, instead of simply offering discount boots at ~$100, they're leading you to think you're getting $300-quality boots and $600 of "free" value in the extra pairs. Framed like that, who could possibly refuse?

afpx 8y ago

I’m very interested in knowing what proportion of retail revenue comes from these types of dark patterns. Is it even possible to come up with a number? If so, I’d be willing to help fund the research. The other day a friend and I were discussing the “take X% off your entire order” coupons. These seem to be very common, lately. She mentioned that she recent used one on a cart of $100 in items. She expected a $20 discount. But, to her surprise, she only received $2 off. Apparently all but one of her items were ‘restricted’ items. It seems like many companies find it easier to trick people than to actually provide great service or products.

tyingq 8y ago
"Free shipping" is a funny one. For smaller businesses, it's basically subsidizing far away customers with nearby customer money. I offer it not because I want to deceive people, but because we sell more that way. People like predictable upfront prices without having to tell anyone their location. It is, of course, not "free". We just calculate the average shipping cost and pad the price.
- ghaff 8y ago
  Part of it is that "free shipping," at least over a fairly modest purchase dollar amount, has become so prevalent from most large retailers that dealing with a shipping charge that's unknown going in and/or that gives sticker shock checking out turns a lot of people off.
  - ip26 8y ago
    The lack of free shipping can also be a clue that this retailer sends $3 widgets via $20 FedEx, or this moderately large item will be $100 freight. In other words, free shipping sellers work hard to find cheap shipping. Those that do not offer free shipping seem less inclined to do so.
- hopler 8y ago
  How much does shipping cost actually vary? I always assumed that first//last mile handling of a package dominates over the fuel/depreciation cost share of driving the item farther.

whoopdedo 8y ago

A related and greater rip-off is the discount cards that give you coupons after a purchase. Consumers become addicted to these "deals" that make it seem as if they're paying a very small amount for something. When in fact they paid up-front with the original overpriced purchase. It amounts to an interest-free loan to the retailer that is paid back to you with those coupons.

chippy 8y ago
These cards are the original data tracking example as by using the cards you give the retailer all your data including demographics of your age and location etc. From what I recall retailers cannot use your credit card purchase history for this, you have to use opt in and use the "loyality" cards.

ocdtrekkie 8y ago

This article of course totally ignored the scenario where the buyer is aware of the going rate for a given item, and either stocks up when a sale happens or waits until the price point they want to pay. The article basically is suggesting "deals are bad" instead of what it should be saying, which is "don't fall for bad deals".

ianai 8y ago
I agree, in the mane. But I think their point isn’t for people who target a specific good or service but who instead suddenly enter a market (purchase something they wouldn’t otherwise purchase) because of a BOGO deal. Quote “”Retailers are often as guilty as you can get with manipulating price of an item,” says Cohen. “You’re often charged a price that nobody has ever paid; anything that’s free is just carved off the regular price.””

richpimp 8y ago

I recently went to a department store called Kohl's for the first time with my wife, who'd been shopping there for years. For those unfamiliar with this store, think something similar to a JC Penney's. What struck me was that above every item was some digital signage showing a discounted price or promotion (B1G1 Free, 25% off, etc.), along with the MSRP price. So basically, anything I looked at seemed like a great deal. They also have a rewards program whereby you get "Kohl's cash" whenever you reach some threshold for purchases (something like $5.00 Kohl's cash for every $100 spent), which effectively gives you a discount. Of course, I soon realized that this was all simply a tactic to encourage people to continue to spend their money in the store, an effective one at that. The "sale" price was really no different than the standard price at any other retail store. It was just the perception of getting a good deal and triggering the dopamine receptors in the brain. I told my wife this, but her reaction was one of incredulity. Her thinking was she was saving money by shopping there. It's such a simple, yet brilliant tactic. Make people feel like they're getting a good deal, and they'll spend more money than they otherwise would.

samstave 8y ago

Tangentailly related; i recently needed to buy a new shirt, where in the past, i had shopped at Express for some work shirts - but havent been in their store in several years - i went in as they were having a 40% off store wide. Their shirts, which i used to have dozens of - are now priced at $69 per shirt... less 40% for this sale. Ive never paid $69 for one of their shirts in the past. So the 40% off now reflects what i ised to have paid. So i feel they raised the prices of their shirts, then hold frequent 40% off sales to lure in traffic of people thinking they are getting a great sale - only to pay what the full retail of the shirt used to be. So Express literally found a way to inflate sales of product through this tactic.

tych0 8y ago
JCPenny very famously nearly went out of business because they do this all the time, but then tried to revert to just pricing things normally. People thought they weren't getting deals any more, so they stopped going there.
heywire 8y ago
I like to call this the Kohl's model. I can't imagine anyone ever pays sticker price for anything in a Kohl's store. The prices are ridiculous. Purchase some socks and underwear and the cashier will gladly tell you that you saved hundreds of dollars. Compared to what?!
gnicholas 8y ago
And banana republic now sells hoodies with a list price of $130, presumable because they’re perpetually running 30% to 60% off sales.

skizm 8y ago

JC Penny almost went bankrupt when they tried to stop doing sales all the time and just charge fair prices. People want sales, even if the item isn't really cheaper.

hakfoo 8y ago

I suspect a lot of the BOGO deal structure is to exploit the consumer who intentionally buys only what he can use. Supermarkets here have gotten big on "buy one get (1, 2, or even 3) free" for large meat packages (racks of ribs, for example), but keeping the price tag high-- say $12 per pound. If you fully exploit the offer, you're effectively paying a bargain $3 per pound, but that requires a lot of fridge space to deal with four big packs of perishable meat. The consumer who says "I only need one or two" is being gouged for NOT wanting to throw rancid leftovers away. A similar related gimmick are the "buy N, save $M deals." If you buy any ten of a pool of random items, they knock off $10 from the order, but if you only need 9, or 1, you're paying full price. There's definitely been a swing from "everyday low prices" to "gimmicks and games." Everyday low price became "3-day sale" became "only with club card" became "only if you install our terrible app and explicitly select you want the promotion ADDED to your club card." I think the ultimate goal is to get where they can advertise aggressive discounts, knowing they don't have to give them to anyone but the people most willing to jump through hoops to get them.

Spivak 8y ago
So price discrimination. I don't see any problem with it. People who are the most price sensitive will jump through hoops and be rewarded for it.

lancesells 8y ago

I just read the book "Dollars and Sense" and recommend it if you're interested in this topic. It's kind of surface level but it does help explain the ways people spend and think about money.

HNLurker2 8y ago

This reminds me of that Elon Musk meme where you buy glasses by searching "x".the glasses are free but the transportation is like twice the price to male em

ksec 8y ago

I think we need to cite those Study were done in US. And the results are pretty much US specific. From my experience ( Retail is big, so it might not be applicable to every category ) Buy one get one free or anything with the word "Free" works in US, Works in UK, Kind of Works in EU, Doesn't work in Asia. Or At least most of the SEA, China, Japan, Korea etc. The consumer mentality is completely different, and in reality the 50% discount price would work better. Having it completely "Free" as the spend $12 Beer for Free T-Shirt example doesn't work in Asia as well. Because you would soon realise these market wont pay a $12 product to get a "Free" T-Shirt. It only works in Japan and Korea, and that also depends on the products. Generally Speaking, Discount is better than Free with Strings attached in Asia Regions. Pricing Strategy, Consumer Expectation and Product Selection is so vastly in every Asian Market are part of the many reason why many large Retailers failed in China.