This email might make you a little angry.
It’s because I’m talking about how marketers trick you into spending more money everywhere you go – both online and in person.
Some tricks are pretty f*cking clever and, so far, legal.
Ready to find out how businesses use psychological traps to keep you spending more money?
How Marketers Trick You
Marketers use subtle but clever methods to trick you into spending money. In fact, there’s a whole genre of psychological research that has uncovered what makes people spend money.
It’s pretty fascinating.
For instance, is it any surprise that most stores place toys near the bottom of the shelf (exactly where your kids will see them)? Or why soft drinks and candy bars are conveniently put at the register, encouraging impulse buys?
Product placement tricks are endless. And it’s no accident.
Here are three brilliant tricks marketers play on all of us that work too well.
Note: I saved the best for last, so be sure to read all three.
1: The Left Digit Bias
Ever wonder why so many products end with $.99 or $.95? It’s because humans mainly focus on the left digit when we evaluate pricing.
Instead of $5.00, it’s $4.99.
Even though it’s just a penny less expensive, our psychological bias makes the $4.99 price seem much more palatable. Believe it or not, research shows most of us round $4.99 DOWN to $4.00, not up to $5.00.
2: The Center Bias
When presented with three different pricing plans, we tend to lean toward the one in the middle. In fact, this works so well that many businesses will highlight the center plan knowing most customers will choose it.
For instance, here’s Big Scoots’ pricing page for their shared web hosting plan. Notice the 155cc Plan is clearly highlighted as the one to buy. It works.
3: The Price Hike + Discount Combo
This is a really tricky one, and you’ll see it around Black Friday and other times of the year when people spend a lot of money.
Marketers secretly raise the price of products shortly before sales or the holidays so the discount price seems like a better deal than it really is.
I’ll show you how this works.
Suppose a pair of shoes costs $120 most of the year. Before a sale, marketers hike the price to $150, then offer a bigger discount so customers think they are getting a screaming deal.
But does the math support that assumption?
30% off $150 sounds better than 20% off $120. Right?
20% off of $120 = $24 savings.
30% off of $150 = $45 savings.
Woot! $45 off sounds like a great discount!
But wait (and here’s where it gets super interesting).
Let’s look at the total price you’ll pay after these discounts. Don’t be surprised if this makes you juuuuuuust a bit angry.
You’ll pay $96 at the 20% off price.
You’ll pay $105 at the 30% off price.
That’s right, marketers just tricked you into spending more money by:
1: hiking the price, then
2: coupling it with a larger discount
Marketers are clever. And pricing strategy is a huge field of study, far more scientific than you probably thought, isn’t it?
We’re being tricked virtually everywhere we go.
FACT: In grocery stores, product placement isn’t random. On websites, pricing tiers aren’t “best guesses.” Once you learn the tricks that marketers play, you’ll be better positioned to make better decisions about the money you spend.
Until next week,