02/21/2017 01:36 EST | Updated 02/21/2017 01:36 EST

These Retail Tricks Are Designed To Make You Spend More

Retail marketing scientists have mastered the art of seduction. They make a living by influencing your purchasing decisions and, on occasion, roping you into buying something you really don't need.

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Retail marketing scientists have mastered the art of seduction. They make a living by influencing your purchasing decisions and, on occasion, roping you into buying something you really don't need. They have myriad analytics at their disposal, and they're not shy about using them to tempt you into abandoning all rational behavior and making impulse purchase decisions -- the kind that results in shocking credit card bills at the end of the month.

Running of the brides

One of the most extreme examples of how far sales can drive otherwise rational people to total shopping madness is Filene's Basement's 'Running of the Brides' sale. Filene's Basement is now closed, but while in business, its annual sale event attracted thousands of brides-to-be from around the world, all eager to find their dream designer dress at a rock bottom price. At 8:00 a.m. the pistol was fired and the doors flew open, launching an all-day bridal war that sent silk and lace flying, and threw etiquette right out the window -- all for the sake of bargain basement pricing.

Hopefully, you won't be involved in a brawl over retailers' wares. But we all feel that inner itch when we learn about a good sale. Marketing tactics have become so slick these days that retailers can regularly convince us to part with our money in unplanned ways and even leave us feeling happy about it.

Sketch via Jono Hey

How fonts and 9's get you to buy

Think of how retail marketing scientists manipulate pricing signage during sales. They commonly use signs that emphasize the original price in big font and deemphasize the sale price in small font. Research shows that when the sale price is presented in smaller font, it gives the illusion of being more affordable and triggers impulsive purchases.

Of course, sales aren't the only way retailers lure us into spending more. There's the ever-popular "number nine" ploy. In the past, whenever I saw items marked at $9.99 instead of $10, I used to say to myself, "Who do they think they're fooling?" But like most people, I underestimated the power of the number nine. As William Poundstone points out in his book Priceless, eight different studies show that setting price points that include the number nine increased sales by 24 per cent!

Sketch via Jono Hey

Pricing decoys

Pricing decoys are another way retailers get you to part with more money than you planned on. In his book, Predictably Irrational, behavioural economist and professor Dan Ariely demonstrates how a large magazine successfully used a strategy called the "decoy effect" to increase revenue from subscription sales. Prospective subscribers were given three choices:

  • Choice #1: Web-only subscription for $59
  • Choice #2: Print-only subscription for $125
  • Choice #3: Web + print subscription for $125

At first glance, the middle price point appears to be superfluous. Why would anyone buy a print-only subscription for $125 if they could get a web and print for the same price? Ariely tested the price points with MIT students and found that 16 per cent of students chose option 1 and 84 per cent chose option 3; not surprisingly, none chose option 2.

Then Ariely did something really interesting; on the assumption that having a decoy price (option 2) was influencing people's choices, he removed the decoy and retested the price points. This time, the subscription choices were as follows:

  • Choice #1: Web-only subscription for $59
  • Choice #2: Web + print subscription for $125

With the decoy removed, the option that had previously been the most popular -- the more expensive print + online access subscription -- suddenly became the least popular choice. Only 32 per cent of those surveyed chose the more expensive option, with 68 per cent selecting the online-only subscription. Clearly, the middle price point wasn't superfluous; it was smart marketing that made option 3 look more attractive to subscribers.

The decoy effect applies to other items as well. Take wine, for example; we end up spending more if we are given three different price points as opposed to two. If one bottle is cheap, say $10, and the third bottle is expensive, ringing in around $50, then suddenly a $30 bottle seems reasonable -- even if the customer only intended to spend $15-$20 at the most.

Sketch via Jono Hey

Only pay full retail

Retailers aren't about to stop using the tried-and-true tricks that have worked for decades. Ultimately, it's up to us resist their persuasion and take responsibility for our spending. That's why I suggest to skip the sale and only pay full retail.

At first glance, this might seem counter-intuitive, but consider this: If you added up all the unneeded items you bought on sale -- think clothes in your closet that still have tags attached, or toys and tools in the garage that have never been used -- you'll probably find that the cost outweighs what you would have spent if you'd only bought things you really needed, even at full retail price. If you consciously walk away from every sale and always pay full retail prices -- on items you really need -- your finances will almost certainly come out on top. Keep in mind I'm not talking about toilet paper and toothpaste; those daily necessities are great to purchase on sale. It's those big ticket items, like high-tech toys or designer duds that you should look to buy only when you really need them, not just because they're marked down.

When there's a "60 per cent off" sign dangling in front of you, it takes a lot of willpower to resist. You may need some practice, and a lot of dedication, to be able to consistently respect your financial limits. But if you commit to only paying full retail price, the "60 per cent off" sign loses a lot of its persuasive power. Don't submit to temptation; take control of your spending habits, and your financial future will remain yours to dominate.

P.S. Wanna learn the easiest way to budget? CLICK HERE and download my ebook Your Magic Number for FREE (20 minute read).

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