Everywhere you look, people are trying to take your hard earned money. In this video I illustrate the common tricks people use to make things seem cheaper than they actually are.
Going to the grocery store you will see common products advertised for super cheap. Say $1 for a loaf of bread or a gallon of milk. The store actually doesn't make money off these or they have very thin margins. The reason why they sell them is because they know if you go into the store to buy one of these, you're actually going to leave with a whole bunch of other stuff that costs a lot more. The goal is to get you in the door by any means necessary. Those super cheap items are called a loss leader, so watch out for those because you may think you're at a cheap grocery store when really you're not.
Buying a new construction house or a new car can have a very deceiving price. You may see ads for a community of houses starting at $200K. Little do you realize, there's almost no one paying only $200K in that community. Is it fraud? Not precisely. The cheapest version of each model house doesn't come with any of the bells and whistles. It starts with carpet in all the rooms, ugly cabinet and counter tops, basically things you dont want in your actual home. The goal for the builder is to make it very annoying for someone to buy the cheapest option. So in order to get all the stuff you really want you'll have to spend about 10%-20% more than planned.
For a car it's similar in the sense that they never give you all the stuff you really want for the entry level trim. It's all cloth seats, no electronic climate control, the power windows aren't as robust, and other small annoying things that make you want to upgrade to the next level up. So the advertised price of the car is often times lower than what you end up actually buying.
The 99 cent rule is all about making prices seem smaller than they are at first glance. We've all seen this since as young as we could remember. The left most digit on a number is the most significant, so the goal is to make that digit smaller. $7.99 vs $8.00. The difference is only one cent but at first glance it looks like a $1 difference. The second aspect of it is the number 9 itself. A study at MIT concluded that people are more attracted to the number 9 than most other numbers. They will rather spend $39 on a pair of clothes than $34.
Sale pricing is a way to get you to think of prices relative instead of objectively. At JC Penny and other clothing stores, everything seems to always be on sale, in perpetuity. At one point, the CEO decided to try something new and just have everything at a set price instead of saying its "on sale". Turns out people didn't like that, their sales plummeted. People want to think they're "getting a good deal". When they see the higher number then a discount down to the lower number, they think they got an excellent deal so they'll buy it and tell all their friends about it. But simply buying it at the discounted price without ever knowing what the "original" price was isn't nearly as appealing.
Sometimes at grocery stores you'll see something listed as 3 for $3. If you buy one of them, its only $1. So why list it as 3 or $3? Because they want to trick you into buying a lot of useless junk you dont need. Sure you need one, but do you really need three?
Finally, subscription models are a great way to get people to hand over their money without blinking an eye. Instead of charging someone $3 to watch a movie online, why not charge them $10 a month, forever? Many times they may not even watch a movie for a solid 2-3 months straight, but they still hand over the $10 every month because its automatically charged. If you had to pay for a movie a la carte, you'd occasionally have some reservation about whether the movie is really worth that $3 or not.
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Dew T
Dewayne Perry
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