Sneaky Pricing Tricks Companies Use on You
Donna Wright
You’ve probably already been the victim of sneaky retailer pricing tricks that made you think you were getting a better deal than you received.
Great Deals May Not Be So Great
Remember the days when you went shopping to simply buy what you needed and get a great deal? Well, nowadays, it’s more like using every bit of your power to resist the tricks that retailers are playing on you, and those misconceptions are affecting your wallet.
According to a press release I just read, the Federal Trade Commission (FTC) is taking action against “drip pricing” by contacting nearly 100 auto groups nationwide, warning that total advertised prices MUST include all mandatory fees that potential buyers will be required to pay.
That got me thinking about the many other slick psychological tricks that are continually being played against us consumers such as crazy discounts, price anchoring, free shipping, and BOGO scams that are part of marketing strategies intentionally designed to appear like an offer you can’t refuse. Based on data compiled by Capital One Shopping, Consumer psychology drives pricing strategies, such as “charm pricing,” which increases sales by as much as 60%.
And, while I consider myself a savvy shopper, even I have fallen for sneaky pricing tricks. While some will seem obvious, understanding the tricks listed below can help you make better purchasing decisions and avoid overspending.
Are Buy One, Get One Free Deals Really Free?
If you’re like me, you love finding a good BOGO (buy one, get one) sale because you get double for the single item price. However, you must consider that some retailers pad the regular price and charge more for the single item price before launching the marketing promotion.
For example, you buy laundry detergent as a BOGO sale and get two bottles for the price of just one at $12.99. Don’t be surprised if the next time you shop, you notice that the same item then has a regular price of just $9.99.
Buying in Bulk
Buying in bulk felt different to me a decade ago. I would go to B.J.’s Warehouse, Costco, or Sam’s Club to pick up simple items like paper towels, toilet paper, party supplies, and huge cookie platters for events. Nowadays, these stores sell just about everything and not everything is as good a “bulk” deal as you’d think.
Sometimes the per-unit prices of bulk items calculate to a higher price than purchasing smaller packs elsewhere. An example is when I bought a 2-bottle bulk package of vitamins for $39.99, calculating to $19.95 per bottle. Yet, at my local Walgreens, I can buy a single bottle for only $16.99. I’m also careful to consider whether it’s cost effective to buy in bulk when I will never use so much of one product such as 36 eggs, three pounds of carrots, or three bottles of mustard.
Shrinkflation - Same Price, Less Product
Many companies have been reducing and reducing product container sizes to avoid a price increase. That is known as “shrinkflation.” You think you’re getting the same great deal, but you’re not.
Have you picked up a bag of potato chips lately? The bag looks identical to the bag size you’ve always purchased before, yet now when you open the bag, it’s mostly filled with air! So, for $5.99, you’re getting the healthy chips cooked in avocado oil, but you finish the bag in one sitting and need to go purchase more for another $5.99. And it’s not just chips. Fast food burgers are shrinking. Pizzas are smaller. Soda bottles are thinner.
Limited Time Offers - FOMO
Hurry! We need to run to the store and take advantage of the “deal of the day” before expiration or the product runs out. Yes, we are all guilty for that marketing manipulation at least once in our life. Fear of missing out, also known as FOMO, is a real thing that retailers want you to feel, suggesting that products are in high demand.
Stop! Before you make an impulse buy, consider that these sale promotions in-store or online are typically repeated throughout the year, so you really won’t miss out.
Charm Pricing and Odd Pricing
Have you ever noticed that retail store prices seem to end in odd numbers? You are not wrong. A report on Capitalone.com showed that approximately 60.7% of retail item prices end in the number 9 and 28.6% of prices end in the number five. This marketing strategy is referred to as “charm pricing” and “odd pricing” making us think we’re getting a better deal. A product priced at $9.99 sounds lower than a $10.00 price tag that appears higher.
The same holds true for discounts that end in an odd number such as a savings of $8.01 sounds better than a savings of $8.00. A little exaggeratory but you know what I mean when I say retailers intentionally try to trick our minds.
Price Anchoring – Making Sale Prices Look Better
Here’s a scenario: You go into Walmart looking to buy a toaster. You are looking at three toasters. There’s a high priced toaster on the left and a high priced toaster on the right. In the middle is a toaster on sale with the price crossed out. This marketing trick is called “price anchoring.” The “anchor” price acts as a reference point to intentionally alter the way you perceive the value of the product. This leads you to select the more expensive option because you think you’re getting a higher discount.
Have you tried to shop at Temu lately? Between the spinning discount wheels or the crossed out anchor prices, it’s enough to make you dizzy. Crossed-out prices are often based on inflated manufacturer suggested retail prices so they look like a bargain but typically they are just the regular price.
“Free Shipping” That’s Built into the Price
Here’s a sneaky pricing trick that may sting a bit. Free shipping may not really be “free.” In fact, many online retailers increase the regular price to make up for the shipping cost. So you’ve been paying for your “free” shipping all along. That’s a frustrating thought when I think about the fact that I typically only make purchases online when I know the shipping is free.
One way you can try to eat up the padded cost, find an online coupon for the retailer. Even a 20% off coupon can help. If you pay $50.00 for your order and use the coupon, you save $10.00 which would be close to the actual shipping cost if it’s a lighter weight package.
Drip Pricing
I could write a book for the amount of times that I’ve been burned by “drip pricing” when companies only advertise a portion of a product’s total cost. Car dealerships, cable, mobile phone stores, airline flights, rental cars, and even furniture stores. I visit the establishment with the sale promotion and by the time the sale is calculated in full, I’m paying much extra money for taxes, car maintenance plans, baggage fees, replacement insurance, and more.
These days, I do a lot of research online before falling prey to drip pricing marketing tactics. The hidden fees that are not disclosed in the low advertised rates can really add up. I’ve even noticed that protection plans and extended warranties that are supposed to “protect” our goods, services, and vacations, are not always cost-effective so you need to weigh the pros and cons.
Creative Merchandising By Design
I’m not going to complain about the beautiful, scented air at Bath & Body Works but it technically falls under the category of creative merchandising to get customers to buy more. The same holds true for relaxing music playing in the aisles of grocery stores along with the strategic merchandise layouts of tempting display cases.
It’s no coincidence that refrigerated cases of soda, energy drinks, candy, and magazines are displayed along the checkout line. And the end caps highlighting the big sales truly make me stop, look, and buy, assuming that it’s a great deal. I mean, why else would it be at the end of the aisle, right? Wrong. It’s just an effective retail strategy. The next time you’re in a canned food aisle, look at where the store brand is displayed vs. the more expensive brands. If you want to save money on the store brand, you may have to reach down to ground level.
Final Thoughts: Takeaways
- Be aware of common pricing tricks so you can spot them ahead of time.
- Some BOGO’s use a padded regular price to appear a good deal.
- Bulk buying does not always calculate to the lowest price per unit.
- Limited time offers instigate FOMO and push impulse purchases.
- Price anchoring is a way to get you to select the perceived better value.
- Free shipping is not always free shipping as prices could be padded to cover shipping.
- Be aware of drip pricing; advertised prices may be a portion of the actual total cost.
- Don’t just select items because of a strategically positioned store end display.
Author Bio: Donna Wright is a personal finance blogger for MoolaStakes.com, who enjoys researching, fact-checking, and expressing complex subjects in understandable terms. As a single parent, she knows the pitfalls of poor money management but also knows the satisfaction of improving finances. Her mission is to provide accurate, unbiased money management insights to money-conscious folks, just like her.
This article is for informational purposes only and does not constitute financial advice. Readers should verify all details independently and use their own judgment when following these practices.