5 ms·

The Low Prices vs. Bargains Dilemma

44 points by kervokian 7y ago

pintxo 7y ago
TLDR: > Low prices make us feel like we're tightwad bastards (Scrooge McDuck style). But bargains make us feel special and smart. And they allow our brains to change the narrative, "I didn't spend $60, I saved $45".
- wolfhumble 7y ago
  My TLDR ;-) > People don't want low prices, they want bargains.
  - mjevans 7y ago
    They also want to feel superior and special. That they've 'won'.
    - agumonkey 7y ago
      After spending quite some time on craigslist like websites, here's how I feel when buying or selling: I want to reach parity. Most of the times these items were sitting in corners, sometimes even some were things I found. But I wanted to make the dance with the other person to find the middle ground where both of us would feel happy. Sometimes even if I gave him more than I should, to me it felt alright. The value is no more in the item, it's in making two people feel happy.
mirsadm 7y ago
That's depressing if true. I would much rather the price be the real thing all year round rather than waiting for a fake sale every second week.
codegladiator 7y ago
Why people never bargain for branded products and mall shops ?
hencoappel 7y ago
This is barely worth reading. I thought there would be more in it, but just read the TLDR in the comments.
Traster 7y ago
I know that the evidence in this case is very clear, and that consistent, low prices didn't work. In fact I think there are a few instances of other people attempting similar strategies like Brandless. But Intuitively I feel like there must be a place for the consistent low prices model. Maybe intuition is just dead wrong in this case, or maybe we're just waiting for some visionary to turn up and everyone will be talking about how crazy it is no one managed to do that strategy before.
- agumonkey 7y ago
  Probably depends on the culture. I'm a cheap "tightwad", I don't like price games, I don't like browsing to find which product is the best (because all brands spends money on trying to look better and hide issues) etc etc But I admit it would cut the usual "deal" hormonal hook.
- gmac 7y ago
  I guess the standard discounting approach means that people who care a lot about low prices can get even lower prices, because to they are to an extent cross-subsidised by people that don't care. In the always-low-prices model, no cross-subsidy is available, so you lose a lot of the people who care about low prices, and you don't gain many of the people who don't care because, well, they don't care.
mft_ 7y ago
This feels like an over-simplification, and not translatable to other examples. JC Penney had an established group of customers who liked what it offered - and for many, this presumably included liking (even enjoying?) the coupons and sales approach that was offered. In changing the model, JC Penney totally disenfranchised the whole group of customers who liked that approach. (It doesn't matter why they liked it, or whether other people also like it... it just mattered to JC Penney at the time that lots of customers did get some sort of gratification from it.) Does this mean that no business can therefore ever succeed without a coupons and sales model? Of course not - and there's plenty of successful businesses with a different model. They're just started with a different model, and therefore appeal to a different customer base from the start. The message of this example isn't that "people don't want low prices, they want bargains". It should be that "you change major aspects of your business model that your established customers like, at your peril".
pjc50 7y ago
The discounting model works well for Steam, Amazon etc. There's a variant used by less reputable retailers where you pretend the product was being sold for a big price then offer a "discount". People absolutely do love being told they're getting something cheap. The "always low prices" model is a bit more complicated to make work than it sounds, but works for e.g. the "discount supermarkets" of Aldi and Lidl. I think the repetitiveness of a purchase matters: if you're buying a one-off, you want the biggest discount and you don't care what the price is at all other times. If you buy the same thing every week, you may be more interested in reducing the decision workload by going somewhere consistently cheap.
- someguyorother 7y ago
  >There's a variant used by less reputable retailers where you pretend the product was being sold for a big price then offer a "discount". Some countries have laws against this, that something can only be advertised as e.g. a sale if the product has had significant sales at the non-discounted price.
  - dazc 7y ago
    The UK has such laws but they don't cover discount codes. So you have retailers that have a few 'sales' where prices are listed as discounted. At other times, the price goes up but generous discount codes are freely available.
- lotsofpulp 7y ago
  > There's a variant used by less reputable retailers where you pretend the product was being sold for a big price then offer a "discount". What’s the difference? I don’t follow Steam, but it used to be common knowledge that every month or so it would offer deep discounts and you should wait until then to buy and people joked about emptying their wallets due to it. How about business to business sales where there is no listed price, even though the product is the same? Microsoft can sell Windows and Office at different prices to whoever it wants. As long as the price is publicly available and transparent, I don’t care what it was an hour before I buy it or an hour after I buy it. I also think it’s funny how people seem to relish clothing discounts as it seems to be causing the same dopamine hits that a scratch off lottery ticket does. Label the dress $200 crossed out, then put a red 50% off sticker on it $100, then put a nebulous sign on the rack saying 30% off clearance taken at register, and you have no idea what the thing costs until it gets scanned. And then the buyer acts pleasantly surprised at whatever price pops up. I’d like to see a service that tracks price history for all goods and you can just look up how much something sold for and easily figure out it’s below average or above average. Like google flight price history.
mcv 7y ago
I hate discounts with special requirements (coupons, bonus cards, etc). Anyone can get the discount, but has to jump through pointless hoops to actually get it. Just give everybody the discount. And I would love a shop that always gave low prices instead of temporary discounts. At least, that's what I keep telling myself; I don't actually mind paying more for quality products. There are a couple of very successful Dutch chains specialising in low prices (Action, Lidl), and I never actually go there. Instead, I go to more expensive shops that have exactly what I want but require a bonus card to claim the discount, which I do while hating it. We're utterly irrational creatures, and I'm no different, apparently. On the other hand, when I bought my first dishwasher, I found a model that was discounted from €300 to €200. I shopped around a bit more and found the exact same model at another shop for €200 and no discount. I bought it at the second shop. So there I clearly did prefer cheap over discounted.
- 7777fps 7y ago
  The hoops are the way such discounts are made affordable. If you're not willing to jump through those hoops you pay more which then subsidize those discounts for those who are willing to do so or otherwise unable to afford the product. Price segmentation helps businesses extract maximum revenue.
  - mcv 7y ago
    Interesting point. So lazy rich people pay more. Although with the bonus cards, literally every regular customer has them, so it's the irregular customers that subsidize the regular ones.
  - dazc 7y ago
    The hoops may also be a way of circumventing legislation. Discount codes are not regulated in the UK, for example, but straight-out price discounting is.
- TeMPOraL 7y ago
  > I shopped around a bit more and found the exact same model at another shop for €200 and no discount. I bought it at the second shop. So there I clearly did prefer cheap over discounted. I'd do the same, but not because "cheap over discounted", but because the second shop is honest, while the first one is trying to trick people.
TeMPOraL 7y ago
My liberal TL;DR: JCPenney failed in switching from coupons to fair and transparent pricing, not because "people love bargains", but because everyone else on the market is manipulating people with bargains. Honesty loses to dishonesty on the market.
Thorentis 7y ago
Short, unsubstantiated, unintelligent post lacking much detail, that is better suited as a comment reply to a more detailed post. They don't offer examples where their claim holds true, nor go into the (potentially interesting) detail of why this might be true psychologically, or link to any studies like these sorts of posts usually do. Even if those studies make vague claims, at least offer further reading.
epanchin 7y ago
I would love to online grocery shop with a core selection of items in my basket. The UK service Ocado provides this functionality, but due to its constantly rotating offers shopping in this manner is inefficient. I would much rather lower prices than offers.
epx 7y ago
I prefer low prices, every time I see an ad like "Save $x" or "From $x to $y" I feel someone was ripped off. But most people may really like the "bargains". Even my wife. I like to tease her "from 3000 to 300 for something that is worth 3".
DHPersonal 7y ago
Every time this CEO is brought out and beaten up I feel compelled to come to his defense. I used to visit JCPenney when I lived in a small city and I was frustrated by the products that felt overpriced for the coupons to later mark down. I had to wait to buy a shirt until the sale went on, and sometimes it meant I searched and bought elsewhere. When this new method arrived I was excited to know that I never had to worry if the price was going to get better or be horrible from week to week, so I could buy on my own terms and not feel cheated. After the CEO was fired and the prices went back to the seesawing coupon schedule, I quit going and moved on to something else. He had a good idea. I will miss the no-nonsense pricing.
- cosmodisk 7y ago
  I'm the complete opposite of my dad. He loves going to shops.He buys mainly on the basis that there's a discount ( real or made up, doesn't matter) on a product.I go to shop based on what I need and if there's a discount on a product I was planning to buy- well, that's great,but that's as much as I care about it.Never do price hunting, coupons,and etc. The problem is, my type is minority and my dad's is majority.
  - ansible 7y ago
    I'm like you with most things I buy. If I just want a shirt, or a bag of rice, or some other commodity, I just want to buy it. I've previously selected a brand with the quality I like, and I don't want to expend any more mental effort on this subject. When it comes to computer parts, I love to shop. I will read and analyze for months, while keeping a close eye on prices. For example, I'd been in the market for a new GPU for a while. And prices over the last couple of years due to crypto-mining have mostly sucked, with retail prices above MSRP for many cards in much of that timeframe. However, in January, I was able to pick up an open-box RX 580 with 8GB RAM for $126, which is still a good deal a couple months later. I've been very pleased with that purchase, and hopefully the rest of my system can handle Baldur's Gate 3 at a decent quality (when the game comes out later this year). I'm not sure what my point is... People are complicated?
    - 7y ago
jrs235 7y ago
Again, as evidenced by this phenomenon, humans are not rational, they are emotional and rationalizing.
bluedino 7y ago
Clothing is so overpriced. A name-brand button-up shirt or pair of jeans is not worth $55 to me. Buying the first shirt and getting the next for 50% off (so 25% off both shirts) is still insulting. When I go to JCPenny, Macy's, or other stores at our dying mall (I think that might be all that's left), I head straight for the clearance rack. I'll buy those clothes for $10 or $15, or less. It's a low price, and I feel like I'm getting a "$55 shirt" for $10.
- karatestomp 7y ago
  The “real” full price of a lot of non-luxury clothes is more like 60-70% of “full price” and it’s not a real sale until it dips under that. A lot of traditionally lower-edge-of-upscale brands have even gone that way. Between that and vanity sizing buying clothes involves a lot of looking at and interpreting bullshit numbers.
xcavier 7y ago
Wow. So much subjective. They lost ~$1Billion in a year. The customer voted.

44 points by kervokian 7y ago

TLDR: > Low prices make us feel like we're tightwad bastards (Scrooge McDuck style). But bargains make us feel special and smart. And they allow our brains to change the narrative, "I didn't spend $60, I saved $45".

wolfhumble 7y ago
My TLDR ;-) > People don't want low prices, they want bargains.
- mjevans 7y ago
  They also want to feel superior and special. That they've 'won'.
  - agumonkey 7y ago
    After spending quite some time on craigslist like websites, here's how I feel when buying or selling: I want to reach parity. Most of the times these items were sitting in corners, sometimes even some were things I found. But I wanted to make the dance with the other person to find the middle ground where both of us would feel happy. Sometimes even if I gave him more than I should, to me it felt alright. The value is no more in the item, it's in making two people feel happy.

mirsadm 7y ago

That's depressing if true. I would much rather the price be the real thing all year round rather than waiting for a fake sale every second week.

codegladiator 7y ago

Why people never bargain for branded products and mall shops ?

hencoappel 7y ago

This is barely worth reading. I thought there would be more in it, but just read the TLDR in the comments.

Traster 7y ago

I know that the evidence in this case is very clear, and that consistent, low prices didn't work. In fact I think there are a few instances of other people attempting similar strategies like Brandless. But Intuitively I feel like there must be a place for the consistent low prices model. Maybe intuition is just dead wrong in this case, or maybe we're just waiting for some visionary to turn up and everyone will be talking about how crazy it is no one managed to do that strategy before.

agumonkey 7y ago
Probably depends on the culture. I'm a cheap "tightwad", I don't like price games, I don't like browsing to find which product is the best (because all brands spends money on trying to look better and hide issues) etc etc But I admit it would cut the usual "deal" hormonal hook.
gmac 7y ago
I guess the standard discounting approach means that people who care a lot about low prices can get even lower prices, because to they are to an extent cross-subsidised by people that don't care. In the always-low-prices model, no cross-subsidy is available, so you lose a lot of the people who care about low prices, and you don't gain many of the people who don't care because, well, they don't care.

mft_ 7y ago

This feels like an over-simplification, and not translatable to other examples. JC Penney had an established group of customers who liked what it offered - and for many, this presumably included liking (even enjoying?) the coupons and sales approach that was offered. In changing the model, JC Penney totally disenfranchised the whole group of customers who liked that approach. (It doesn't matter why they liked it, or whether other people also like it... it just mattered to JC Penney at the time that lots of customers did get some sort of gratification from it.) Does this mean that no business can therefore ever succeed without a coupons and sales model? Of course not - and there's plenty of successful businesses with a different model. They're just started with a different model, and therefore appeal to a different customer base from the start. The message of this example isn't that "people don't want low prices, they want bargains". It should be that "you change major aspects of your business model that your established customers like, at your peril".

pjc50 7y ago

The discounting model works well for Steam, Amazon etc. There's a variant used by less reputable retailers where you pretend the product was being sold for a big price then offer a "discount". People absolutely do love being told they're getting something cheap. The "always low prices" model is a bit more complicated to make work than it sounds, but works for e.g. the "discount supermarkets" of Aldi and Lidl. I think the repetitiveness of a purchase matters: if you're buying a one-off, you want the biggest discount and you don't care what the price is at all other times. If you buy the same thing every week, you may be more interested in reducing the decision workload by going somewhere consistently cheap.

someguyorother 7y ago
>There's a variant used by less reputable retailers where you pretend the product was being sold for a big price then offer a "discount". Some countries have laws against this, that something can only be advertised as e.g. a sale if the product has had significant sales at the non-discounted price.
- dazc 7y ago
  The UK has such laws but they don't cover discount codes. So you have retailers that have a few 'sales' where prices are listed as discounted. At other times, the price goes up but generous discount codes are freely available.
lotsofpulp 7y ago
> There's a variant used by less reputable retailers where you pretend the product was being sold for a big price then offer a "discount". What’s the difference? I don’t follow Steam, but it used to be common knowledge that every month or so it would offer deep discounts and you should wait until then to buy and people joked about emptying their wallets due to it. How about business to business sales where there is no listed price, even though the product is the same? Microsoft can sell Windows and Office at different prices to whoever it wants. As long as the price is publicly available and transparent, I don’t care what it was an hour before I buy it or an hour after I buy it. I also think it’s funny how people seem to relish clothing discounts as it seems to be causing the same dopamine hits that a scratch off lottery ticket does. Label the dress $200 crossed out, then put a red 50% off sticker on it $100, then put a nebulous sign on the rack saying 30% off clearance taken at register, and you have no idea what the thing costs until it gets scanned. And then the buyer acts pleasantly surprised at whatever price pops up. I’d like to see a service that tracks price history for all goods and you can just look up how much something sold for and easily figure out it’s below average or above average. Like google flight price history.

mcv 7y ago

I hate discounts with special requirements (coupons, bonus cards, etc). Anyone can get the discount, but has to jump through pointless hoops to actually get it. Just give everybody the discount. And I would love a shop that always gave low prices instead of temporary discounts. At least, that's what I keep telling myself; I don't actually mind paying more for quality products. There are a couple of very successful Dutch chains specialising in low prices (Action, Lidl), and I never actually go there. Instead, I go to more expensive shops that have exactly what I want but require a bonus card to claim the discount, which I do while hating it. We're utterly irrational creatures, and I'm no different, apparently. On the other hand, when I bought my first dishwasher, I found a model that was discounted from €300 to €200. I shopped around a bit more and found the exact same model at another shop for €200 and no discount. I bought it at the second shop. So there I clearly did prefer cheap over discounted.

7777fps 7y ago
The hoops are the way such discounts are made affordable. If you're not willing to jump through those hoops you pay more which then subsidize those discounts for those who are willing to do so or otherwise unable to afford the product. Price segmentation helps businesses extract maximum revenue.
- mcv 7y ago
  Interesting point. So lazy rich people pay more. Although with the bonus cards, literally every regular customer has them, so it's the irregular customers that subsidize the regular ones.
- dazc 7y ago
  The hoops may also be a way of circumventing legislation. Discount codes are not regulated in the UK, for example, but straight-out price discounting is.
TeMPOraL 7y ago
> I shopped around a bit more and found the exact same model at another shop for €200 and no discount. I bought it at the second shop. So there I clearly did prefer cheap over discounted. I'd do the same, but not because "cheap over discounted", but because the second shop is honest, while the first one is trying to trick people.

TeMPOraL 7y ago

My liberal TL;DR: JCPenney failed in switching from coupons to fair and transparent pricing, not because "people love bargains", but because everyone else on the market is manipulating people with bargains. Honesty loses to dishonesty on the market.

Thorentis 7y ago

Short, unsubstantiated, unintelligent post lacking much detail, that is better suited as a comment reply to a more detailed post. They don't offer examples where their claim holds true, nor go into the (potentially interesting) detail of why this might be true psychologically, or link to any studies like these sorts of posts usually do. Even if those studies make vague claims, at least offer further reading.

epanchin 7y ago

I would love to online grocery shop with a core selection of items in my basket. The UK service Ocado provides this functionality, but due to its constantly rotating offers shopping in this manner is inefficient. I would much rather lower prices than offers.

epx 7y ago

I prefer low prices, every time I see an ad like "Save $x" or "From $x to $y" I feel someone was ripped off. But most people may really like the "bargains". Even my wife. I like to tease her "from 3000 to 300 for something that is worth 3".

DHPersonal 7y ago

Every time this CEO is brought out and beaten up I feel compelled to come to his defense. I used to visit JCPenney when I lived in a small city and I was frustrated by the products that felt overpriced for the coupons to later mark down. I had to wait to buy a shirt until the sale went on, and sometimes it meant I searched and bought elsewhere. When this new method arrived I was excited to know that I never had to worry if the price was going to get better or be horrible from week to week, so I could buy on my own terms and not feel cheated. After the CEO was fired and the prices went back to the seesawing coupon schedule, I quit going and moved on to something else. He had a good idea. I will miss the no-nonsense pricing.

cosmodisk 7y ago
I'm the complete opposite of my dad. He loves going to shops.He buys mainly on the basis that there's a discount ( real or made up, doesn't matter) on a product.I go to shop based on what I need and if there's a discount on a product I was planning to buy- well, that's great,but that's as much as I care about it.Never do price hunting, coupons,and etc. The problem is, my type is minority and my dad's is majority.
- ansible 7y ago
  I'm like you with most things I buy. If I just want a shirt, or a bag of rice, or some other commodity, I just want to buy it. I've previously selected a brand with the quality I like, and I don't want to expend any more mental effort on this subject. When it comes to computer parts, I love to shop. I will read and analyze for months, while keeping a close eye on prices. For example, I'd been in the market for a new GPU for a while. And prices over the last couple of years due to crypto-mining have mostly sucked, with retail prices above MSRP for many cards in much of that timeframe. However, in January, I was able to pick up an open-box RX 580 with 8GB RAM for $126, which is still a good deal a couple months later. I've been very pleased with that purchase, and hopefully the rest of my system can handle Baldur's Gate 3 at a decent quality (when the game comes out later this year). I'm not sure what my point is... People are complicated?
  - 7y ago

jrs235 7y ago

Again, as evidenced by this phenomenon, humans are not rational, they are emotional and rationalizing.

bluedino 7y ago

Clothing is so overpriced. A name-brand button-up shirt or pair of jeans is not worth $55 to me. Buying the first shirt and getting the next for 50% off (so 25% off both shirts) is still insulting. When I go to JCPenny, Macy's, or other stores at our dying mall (I think that might be all that's left), I head straight for the clearance rack. I'll buy those clothes for $10 or $15, or less. It's a low price, and I feel like I'm getting a "$55 shirt" for $10.

karatestomp 7y ago
The “real” full price of a lot of non-luxury clothes is more like 60-70% of “full price” and it’s not a real sale until it dips under that. A lot of traditionally lower-edge-of-upscale brands have even gone that way. Between that and vanity sizing buying clothes involves a lot of looking at and interpreting bullshit numbers.

xcavier 7y ago

Wow. So much subjective. They lost ~$1Billion in a year. The customer voted.