most of us, Michelle Levy, 44, loves a deal. So after
the president of a DJ management company heard about a
good facialist — and then saw that same salon selling
the service on a group discount website — she clicked
quickly. Not only did she imagine the $39 facial would
typically sell for over $80, but there’s a big
difference between good and bad skincare. Problem was,
when researching the regular price for tipping purposes,
Levy learned her presumed discounted price was the same
one listed on the spa menu.
didn’t feel so great about the deal anymore," she
have long asserted that when it comes to jumping at the
chance to spend our money on sale items, our vision of a
high original price — even one appearing our minds —
will cause us to more favorably view the deal. But new
research sheds a brighter light on our how our brains
work — and perhaps why Levy feel hard for the facial
— saying the level of persuasion will depend on our
evaluation of our other choices, whether we focus on all
the similarities or differences. Knowing this can help
break the spell of what could turn out to be a pretty
consumers already question the validity of pricing
information," says Susan Jung Grant, an associate
professor of marketing at Boston University. "What
shoppers may not realize is that there are many subtle
ways other information might be affecting their
estimation of the deal."
you’re debating about whether to buy a sale-priced
pair of running shoes, she suggests. You could consider
the how different all running shoes are from one another
— Nike Air ultra cushioning, PUMA suede styling, New
Balance adjustable arch support. Or you could consider
how similar they are — casual footwear, appropriate
for athletics. By paying attention to the likenesses,
and then considering the original price, we’re more
likely to consider the deal good. If we however focus on
the differences, we may just walk away.
about commonalities brings together the super-duper
deluxe at the top of the spectrum to the item and lumps
them together as birds of a feather," says Jung
Grant. "This makes the lower sales price even more
surfaced in a series of experiments during which
subjects evaluated deals, says Christina Kan, a
researcher at University of Colorado who led the team.
In perhaps the most telling, a group of over 200
shoppers were shown two products known to — at least
in our minds — have lots of similarities for low and
high priced versions: jeans and sunglasses. There were
also products known to have differences across price
ranges, such as phones and backpacks. Shoppers rated the
deals involving products with a lot of overlap in
characteristics — or many similarities across price
ranges — more positively.
people see an advertised reference price, they have a
more positive perception," says Kan. "We found
that positive perception to be greater when in our minds
there’s a lot of overlap within a product
Ellwood, sale expert and author of Bargain Fever
(Penguin) believes, sure, the impact may vary but that
high reference prices are so effective for prying the
money from our pockets, some retailers use them outside
of sales, he says. Ellwood argues in his book that
retailer J. Crew manufactures a couture line it has no
intention of selling. Rather, those high-priced pieces
placed around the shop will cause us to scoop up the
lower-priced merchandise with great fervor.
Handbag-maker Coach also, he says, strategically places
$1200 purses in our view so the $500 ones appear to be
are decoys," he says.
even manipulate us with low reference values, says
Ellwood. It’s called "Goldilocks Pricing"
and done by placing, say, three televisions in a row,
priced least to most expensive, he says. We’ll usually
head straight to the mid-priced model that might just
also have the highest profit margin.
even pay an extra $100 to reassure ourselves we’re
buying the middle one," he says. "Don’t be
afraid to buy the cheapest. You’re actually
outsmarting the store."
steered into sale purchases we later regret, the money
might not be gone for good, says Michelle Madhok,
shopping expert and founder of author of SHEFinds.com.
Pay with an American Express card, because the company
will refund your money even if the store will not, she
says. The big retailers including J. Crew, says Madhok,
will typically give you a price adjustment if the item
you select is lowered later. Many times, stores won’t
give you money back but will concede to giving you store
credits on gift cards, which can be sold on sites such
less than the face value," says Madhok, "but
not a complete loss."