With the holiday shopping season almost here, remember to take the time to make smart purchases.
Spend less this holiday shopping season by outsmarting common sales strategies
From 2-for-1 deals to advertisements pushing consumers to “buy now,” being aware of retailers’ marketing methods can help you save money.
By Kevin Brasler
For 50 years, the nonprofit Twin Cities Consumers’ Checkbook has tracked prices and evaluated retail practices. Our secret shoppers have obtained more than a million prices for everything from alternators to zucchini, from hundreds of retailers and service providers.
All that research adds up to one key piece of advice: If you want a great deal on anything, shop around. Here are 10 sneaky pricing and selling strategies to watch out for while you’re checking off your gift list.
Constant sales
Many retailers constantly advertise big savings. But these promotions usually aren’t discounts at all. After tracking prices of big-ticket items sold at 24 major retailers for 33 weeks, Consumers’ Checkbook found 21 of the stores claimed to offer discounts more than half the time. For several chains, most of the items we tracked were offered at false discounts almost every week.
These special-but-not-really-special discounts, holiday sales (we’re looking at you, Black Friday) and events are meant to manipulate you into buying items right away. It dissuades you from shopping around. After all, if something is “60% off,” what’s the point of comparing prices elsewhere?
All this good-deal euphoria is also designed to make you snap up more stuff while you’re at it.
Inflated anchor prices
On the flip side of constant sale pricing is fake “regular” pricing, referred to in the industry as “anchor prices.” Most sellers show prices crossed out with lower “sale” prices splashed nearby. The store or its competitors rarely, if ever, charge those crossed-out higher “list” prices; they’re gimmicks to make that day’s prices seem like bargains.
Scarcity warnings
Demand is high! Supply is low! Act quickly or you won’t get that hotel room/pair of sandals/grill. Usually, it’s a ruse to make you buy now. Don’t let warnings like these deter you from exploring your options.
Free or inexpensive trial periods
Companies that offer subscriptions often bait their sales hooks with introductory discounts or reduced-cost trial memberships knowing that once customers sign up, they’ll later pay higher rates month after month.
Every year or two, evaluate your business relationships — particularly your cable and cellphone bills, bank accounts and credit card accounts — to make sure you’re not paying for something you’re not using. And shop around to ensure you’re paying the best rate.
Special treatment
“Because you’ve been a great customer,” “because we have a crew working nearby,” “because you’re a parent” or “over age 65.” Salespeople know if they can convince you that you’re receiving special treatment, you’ll feel good about their offers and might not shop around to find better prices or terms.
Fake deadlines and limited-time offers
Don’t rush. Especially ignore the countdown clocks many companies post on their websites around the holidays. Most of the prices you see will still be there once the “special event” ends.
And don’t assume “clearance” or “clear-out” sales signify amazing deals. You might have seen or heard there’s a best time of the year to buy something because sellers need to clear inventory — for example, wait until the end of summer to buy a new grill. These claims generally have no merit. Checkbook’s shoppers find “clearance” items available for the same price from the same sellers months later.
Hidden fees
Unfortunately, for many services, the prices companies offer you are rarely what you’ll pay. Hidden fees cost consumers billions each year. Some of the biggest offenders are hotel- and vacation-booking sites, which often churn out per-night rates in search results that don’t include mandatory “resort” and other fees.
Charm prices
Stores display prices ending in 99, 98 or 95 to make prices appear lower: $9.99 is perceived as “$9 and change,” rather than $10. It’s not the “99″ or “95″ at the end of the price that affects us. It’s that shoppers pay most attention to the left-most numbers in a price; $199 seems a lot better than $200.
Also effective is pricing using seemingly random amounts, say, $328.46. This makes it look like someone carefully set the price so it is as low as possible.
Alternative payment methods
Many companies have taken a cue from casinos’ use of chips by pushing alternative payment methods. For example, using Starbucks’ mobile app to pay for daily $5 lattes feels like you’re not spending real money. Gift cards are another way retailers can make you to spend more. They collect money up front for future purchases and tie gift recipients into buying stuff from them rather than the competition. There’s a decent chance the receiver will lose or forget about the gift card, but the company will still realize a near-100% profit.
Easy math
Some sellers, especially those with pricey products, advertise discounts as nice round dollar savings (”Save $100″), rather than as a percentage off. The idea is that you’ll more easily absorb the supposed deal. Similarly, some sellers group items for one price (four for $10). You’ll buy four of them, even if you can buy just one for $2.50. We all fall for this.
Want to learn more? Star Tribune readers can view Checkbook’s full list of marketing tactics to be aware of, along with all its ratings of local service providers and consumer advice free until Dec. 5 at Checkbook.org/StarTribune/Shopping. Twin Cities Consumers’ Checkbook magazine and Checkbook.org is a nonprofit organization with a mission to help consumers get the best service and lowest prices. We are supported by consumers and take no money from the service providers we evaluate.
about the writer
Kevin Brasler
Twin Cities Consumers’ CheckbookThe Minneapolis-based retailer lowered its profit outlook for the rest of the year as consumers remain frugal.