It’s all in your head

You walk into a store and you instantly fall in love with the price? or the product? is it price at first sight? Consider the many blinding occasions that you have experienced a greater than usual excitement and emphasis towards pricing and discounts. Here’s a reminder:


Did that get you excited? No? How about the second one which came to my email today and seemed to have worked because my wife rang me straight away, I then asked her what were you looking for, the response, “I don’t know, was just cool to see they having a big sale” I immediately thought that my wife had fallen victim to a marketing trick called psychological pricing. I could be making this all up but you get the idea (except this doesn’t work too well on women’s shoes for some reason as they don’t seem to care about prices). Okay moving’s a discussion on some mind benders;

Artificial Time Constraints – You’ve seen the adverts, a one day only sale! and it does something to consumers to think ah, I only have one day to buy. Customers are afraid of missing out of a sale and losing it to their best friend. Rug’s a Million?

Charm pricing – Well I’m charmed. 9’s at the end of the price increases consumer demand. Really? well look at this one and tell me which one is more attractive? $2.00 or $1.99? Why it’s $1.99 of course, that extra 1 cent is the most valuable saving you’ve had this year. Of course this needs to swing in both directions. If you are buying something really expensive like a gold ring for your mistress.. I mean wife do you really want her to see you buying it for $5999.99 or $6000 or even $6k, something like $5999.99 may tell her that you are cheap and after a deal breaker. This also goes into the appearance of the price as longer prices appear to be worth more than shorter ones.

Innumeracy – Which do you think is a better deal? Buy one get one free or 50% off two items? I am pretty sure it amounts to the same thing?

The main thing is to be aware of marketing tactics and not fall victim to them but that would also mean we would be putting marriage counselors out of business and fall down in social popularity. I can just hear my daughter saying “But Alice has one and I don’t”

You can read more detail here or if you want or you could go checkout the latest sales at    JB’s

Have you experienced price imprints? Do you know a good deal when you see one? Is 99c better than $1.00? or are you null and void to the effects of price Psychology?


11 thoughts on “It’s all in your head

  1. Interesting post Raymond. Why is it that the prospect of missing out on something you didin’t know you wanted or needed, just because it’s bargain lures you inot a sale? Although, if I was going to buy it anyway, why pay full price? The reduced price tag might lure me in, but if I can’t find exactly what I want, I won’t buy it just for the sake of it. Then again, how many times have you purchased something, only to ask yourself a day, a week or month later, what was I thinking? Charm Pricing may have worked when we had 1 cent coins when you got change, now we all know it’s rounded up, so I don’t get it either. Given that we’ve all been bombarded with it since birth (& probably inutero when Mum was shopping) we’re porbably all numb & don’t even realise it! That’s why I love shows like The Checkout and The Gruen Transfer, and why I’m enjoying this unit so much. They’re removing the blindfold!


  2. Thanks for an entertaining read. On reflection I think I have fallen for all of these ‘techniques’ at some time. The charm pricing approach is interesting as it seem we are all aware of it but I am aware of having to consciously remind myself that $1.99 is effectively $2. That left to right reading thing really shapes our behaviours and interpretation. I wonder how many times have we all in an low involvement purchase or when strapped for time have simply and unconsciously fallen for it. I for one do not have a mental tally of what my total bill will be at the checkout and wouldn’t pick up that I had inadvertently purchased an item that cost a dollar more than I thought. Its only a dollar you might say – but they sure add up.


  3. I have definitely fallen for these methods before! Although i like to think that i have started to pick up on these price tricks! In particular, i can’t tell you how many times i have fallen for a “buy one get one free” offer, only to end up at the counter realising that the “2 for 1” deal doesn’t really weigh up- unless you pick 2 items of the same price!
    These stores have terms and conditions on the “buy one get one free” offer – where you pay for 1 item, but of course you pay for the most expensive one, and get the cheaper one for free.

    I know personally this has happened to me, as i go into a store and find say, a pair of jeans or a jumper, and then notice the ‘2 for 1’ offer, and i almost always end up picking up something i’m not particularly interested in, perhaps a simple plain singlet or a t-shirt. In this case- i’m still paying full price for the item i went into the store to buy, but i leave feeling like i have gotten better value for it – when most of the time the item that i didn’t really want ends up sitting at the bottom of my clothes drawer for months on end until i do a big clean out!
    In these cases, 2 items for 50% off would be better i think!

    I recently had another experience that your post made me second guess…
    Last week i went into MYER, and found a winter coat that i really liked.
    After realising the price of the coat, i decided that it was too expensive and that i didn’t really have the money to justify the purchase right now, so i walked away and went to exit the store.
    On the way out however, i noticed that MYER had one of those “3 day sales”. I then noticed that the sale included the 30% off the specific brand that the coat.
    I turned around and went back to pick up the jacket, did a quick calculation and realised that if i bought it that night- i would save about $40 compared to if i came back and decided to buy it when it was full price.
    I still didn’t really have the money spare to justify this purchase- but it was a new season winter coat and i decided to do it anyway (‘ill just put it on credit’).. I left the store with my new jacket and felt like i had made a good decision and saved myself $40!
    Now i wonder- was it a good choice? should i have waited a few days to think it over before buying it? did i really save the money ?

    Thanks for the interesting post!


  4. Woolworths plays this game particularly well, with its 2 for 1 deals or 3 for $5 but one for $2.50 etc etc, or the please scan your Everyday Rewards card for an extra discount. It never ceases to amaze me how often I walk out of the supermarket with extra items, I didn’t need because it was too good to refuse!
    Well played Woolies, well played!


  5. One of the thing I’ve noticed, particularly with my older sister, is her ability to justify her purchase of an expensive item because of a sale. She is an avid shopper, especially in the jewellery and handbag areas, and thus is subscribed to many online newsletters. I remember a few years ago when she received a letter in the post about a deal on Mimco bags. Now if you’re not familiar with Mimco, let me just tell you, that in my opinion, they are ridiculously expensive, however, they are a particular brand favourite of my sister. Now, she wasn’t in any desperate need for a new bag, nor was it filling any specific gap in her handbag collection, but she could not go past the fact that the bags were on sale. The day that she came home with her new purchase and proudly showed it off to my family, I sat there in shock asking, ‘did you need it?’ and ‘how much was it?’. When she replied with a ‘it was on sale! $100 off!’ I immediately asked, ‘Well, how much was it originally?’ and when she replied ‘$499’ I was horrified. When rationalising it to herself, she rounded up the original price to $500 and justified her purchase by saying she was only paying $399. The fact that she added that $1 to the original price was of particular importance to her as the difference between the first digit of 3 and 5 makes the deal seem a lot better.
    I for one cannot fathom spending that amount of money on a purchase made on the spur of the moment. I remember immediately thinking, ‘but that’s $400!’, which to me is not so much of a deal, especially considering the item was not really needed!
    It is sales and strategies like this that lure in impulse buyers, making them rationalise purchases as that they are saving money by buying items now, rather than allowing them to understand that they are actually spending a great deal of money on something they wouldn’t have even thought about if they had not received notification about the sale.


  6. One of the things I found particularly interesting about the psychology of pricing is the principle of mental accounting. Buying a large quantity of something now is an investment, and then is considered ‘free’ when it is consumed. Presumably this is why the 2 for $5 promotions work so well…not only is it discounted at the time of purchase, but if you don’t need the second one and take a while to consume it, it becomes free (in terms of your mental accounting)!


  7. Recently I was shopping for a new lounge suite. I checked out many of the different furniture stores, the prices the styles etc. I finally found one I liked at Harvey Norman that I love and the price was $2,200. I was happy with this price so sent my husband in to look at it. My husband talked the salesperson to ensure we could get the chaise on the right end we wanted to suit our family room. This lounge suite had been the same price for some time I might add. Then as my husband was happy with it also, we made the decision to go and purchase it and went into the store on a weekend. I noticed the couch had jumped up $700, to $2,900. I couldn’t believe it. I was not prepared to pay that much extra and couldn’t see that it had been on sale or anything. As I was vocalising about my shock to my husband in the store I noticed that there were a couple of sales people nearby, not busy, but not coming over to assist either. We left the shop. My husband argued that we both liked it and we should just buy it. I however, was very annoyed at both the lack of service and the fact of it just jumping up in price and argued (nicely) that we were not going to buy it. I felt disappointed because I really wanted that couch. The following week, Harvey Norman advertised a 30% off sale on everything. I decided to go back in the store because this would mean I could get it for $2,030 which of course is $170 cheaper than the original price, hence a saving. Whilst we purchased the couch, and my husband was oh so happy that I stood my ground and didn’t buy it at the higher price or even at the original price, I couldn’t help but think what a wrought!!! They deliberately put the price up so that the sale wouldn’t really be a 30% off sale. I had to wonder how many people might have purchased it during that period of it being $2,900? I often come across this type of price hiking right before a sale and am always very annoyed, do they think we don’t know?


  8. I like this topic. To share my experience – one day I saw a glass measure cup in Coles and it was $9.9. It looked really lovely so I remembered that. 2 days later I went to harris scarfe, (If you are in Australia, you might know harris scarfe is a shop which always has huge discounts on cooking products, some times you even can see some stuff are marked as 80% off.) and I happened to see the same measure cup. Guess what, it marked as 50% off from original price, which was $22, so the actual price was $11! if I did not know I could get it cheaper in Coles, I would definitely buy it straightway at H&S. Why? Who could say no to 50%! Since then, I know H&S’s tricks so I’m very cautious when spending money in their stores. I would say, as customers, we are always learning as purchasing, we can be fooled once, but not forever. psychological pricing can be used but they need to have a fine balance. Over use could give customer bad impression then brings negative impacts on brands.


    • I agree with nkraskov who, in an earlier post said the $1.99 thing doesn’t work so well anymore. We don’t have one cent coins anymore so doesn’t everyone round it off? Very interesting what Joanne Quan said about Harris Scarfe in the previous post. Is that even legal? I thought stores couldn’t double their prices before a sale and then say 50% off?
      I think psychological pricing definitely works. Especially on women. I get a high out of bagging a bargain. Nothing excites me more than a 50% off sign. Even if it wasn’t actually 50% off like in the Harris Scarfe incident, I can tell my husband it was and then he is happier that I didn’t pay full price. It definitely works an an emotional, feel good level and is a good pricing strategy.
      One of my favourites is the bundle buys you get in the Coles and Woolworths bottle shops. I love the fact that I am getting 3 good wines and saving $18, for example. It works particularly well with wine as it is a purchase you think about more than food but is not too complicated. Bundle buys on different articles of clothing for example might be too stressful a decision!


  9. Thank for posting. I though I also experienced psychological pricing as you mentioned above. Everyday, I got a lot of emails from advertising websites who offer “big sale”, “up to 70% off”. They are really big deal for myself if there are any 70% sale of my favourite brand. However they are not. In fact, that is a trick of dealer, even their price on website is higher than original price in store. Customer should be patient when making any purchase because of their benefit. In my point of view, I really don’t care much about it’s price is 5,999 or 6,000. Checking all information and market price before purchasing, which is my own experience.


  10. Interesting blog. Everyone loves to get themselves a bargain and save some money at the sales.
    There is another side which you briefly touched on with your ring scenario for the mistress (i mean wife..)

    The basic law of demand in economics states that: “other things remaining the same, the higher the price of a good, the smaller is the quantity demanded; and the lower the price of a good, the greater is the quantity demanded”.

    Would your wife prefer two cheaper rings or one expensive diamond ring? one diamond ring. This law of demand is not always the case, you need to think about the purpose/nature of the good. For example, the purpose of the diamond ring is its exclusivity and to be portrayed as “rich” or “important”.
    If the diamond ring wasn’t such a high price or if there were constantly sales dropping the price, the ring would lose its value to the consumers and no longer be as special. Luxury exclusive items have to remain high to keep their value to the consumers.


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