Stores are a lot like magicians. They’re always trying to get money to disappear from customers’ bank accounts and wallets, and they often manage that with marketing tricks.
What they do isn’t illegal, and often, it isn’t even unethical. Retailers are simply well versed in consumer psychology, and for those shoppers not paying attention, you may find that you’re often spending a little more than you intended.
To become a savvier shopper, note these 15 ways shoppers are often lured into buying.
How Companies Trick You Into Spending More
1. Buy now pay later.
2. The “buy these for just X dollars” signs.
3. Taller, narrower packages.
4. “Up to” sales.
5. Advertising telling you a product isn’t expensive.
6. Rebates.
7. You aren’t buying what you think you’re buying.
8. The number 9 trick.
9. Advertising focusing on low payments, not the final price.
10. No dollar signs and other menu tricks.
11. Price anchoring.
12. Freemium offerings.
13. Decoy pricing.
14. Bundling.
15. Loyalty programs.
[SEE: 10 Best Money-Saving Apps]
1. Buy Now Pay Later
You may not think of it as a marketing trick, but, yeah, it really is, says Todd Stearn, whose website, TheMoneyManual.com, is all about saving money.
“The number one pricing strategy companies use to persuade us to spend more is the installment plan. Today, there’s a new spin on it. It’s called Buy Now, Pay Later, or BNPL,” Stearn says.
Stearn says that over 60% of Americans under the age of 45 use BNPL, referencing a 2022 survey that came away with those conclusions.
“This is why so many companies today offer a BNPL option to customers,” Stearn says.
He has a point. If BNPL didn’t cause customers to spend more money, it wouldn’t have caught on.
2. The ‘Buy All These for Just X Dollars’ Sign
This is a popular marketing trick that supermarkets like to use, and it’s one that shoppers, especially in these inflationary times, will want to be aware of.
“A retailer will post a sale sign that advertises five items for $5,” says Michael Levin, professor of marketing at Otterbein University in Westerville, Ohio. “A consumer may not know that they can purchase just one item for $1. They’ll buy five items because they think that’s the only way to get the deal.”
3. Marketing Tricks in the Form of Taller, Narrower Packages
You shouldn’t judge a book by its cover, but you should judge a package’s cover before deciding to buy it.
“Consumers often think that a taller, narrower package holds more product even when it doesn’t,” says David Hagenbuch, a professor of marketing at Messiah University in Mechanicsburg, Pennsylvania, and founder of Mindfulmarketing.org. “For example, notice how many ice cream containers have shrunk in girth but not in height?”
Marketers and economists have a name for this phenomenon, where the packaging gets smaller but the price stays the same: shrinkflation.You think you’re buying the same product as always — and you are, only you’re purchasing less of it.
4. ‘Up To’ Sales
This has happened to all of us: “You’re walking by a store, and a big, bold sign inside catches your eye: 50% off,” Hagenbuch says.
Naturally, you walk inside, hoping to find great deals and oblivious that you’ve stumbled onto one of the more popular marketing tricks. You notice the fine print, and it actually says “up to 50% off,” meaning an item can be discounted by any amount between 1% and 50%.
If you had not seen the fine print, “you start shopping, believing that you’ll find lots of half-off deals,” Hagenbuch says.
5. Advertising Telling You a Product Isn’t Expensive
This marketing tactic is called “price framing.” For instance, a 2007 Carnegie Mellon University study demonstrated that if a business changed the description of an overnight shipping charge on a free DVD trial offer from “a $5 fee” to “a small $5 fee,” the response rate climbed 20%. You may think you’re too smart to let an adjective persuade you that a price is reasonable. But if you aren’t thinking carefully, it’s easy to see how an adjective might convince you that a fee is “small.”
The idea behind price framing is that while the retailer can’t change the price, they may be able to change the consumer’s perception of it. There are many different forms of price framing, too. “Drip pricing,” for example, is when you don’t see the total price (including shipping fees and taxes) while online shopping until the item is in your cart, and you’re all ready to click “buy.”
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6. Rebates
Whether it’s through the mail or going through a website, manufacturers know you’re probably not going to send in a rebate, Levin says, adding that the redemption rate for rebates is “far lower than the redemption rate for coupons.”
Making matters worse, he adds, “retailers often incorporate the final price after rebate in very large print on the sale sticker.” Consumers “get confused and think they’ve already received the discount or simply forget to redeem the rebate,” Levin says.
7. You Aren’t Buying What You Think You Are
Watch out for food products masquerading as something they’re not, Hagenbuch says.
“For instance, some name-brand ice cream makers have reduced the cream content of their products so much that they can no longer be called ice cream. Instead, they must be labeled ‘dairy products,'” he says. “This terminology, however, is not readily displayed on the packaging, which mimics what consumers are used to seeing for real ice cream.”
8. The Number 9 Trick
Retailers like prices ending with the number nine — like a $999 TV — because consumers tend to think, “Oh, that’s less than $1,000!”
But it’s a tactic that works, studies have shown. For instance, in 2003, the journal Quantitative Marketing and Economics conducted field studies testing prices that employed the number and found that when a consumer was offered the choice to buy similar merchandise — like a $49 dress versus a $44 dress — more people would purchase the item that ended in nine.
9. Advertising Focusing on Low Payments, Not the Final Price
This is another form of price framing: Many ads will inform you that for just the price of a cup of coffee per day, you can afford a certain insurance or cellphone plan. Car dealerships often focus on the monthly payment, asking how much you can afford per month — instead of how much you can afford, total.
If you’re buying anything requiring monthly payments, look at the annual cost and how much you’ll have spent when your purchase is completely paid for. That’s often the last thing a retailer or online lender wants you to do.
10. No Dollar Signs and Other Menu Tricks
According toCornell University research, consumers tend to spend more when dollar signs are left off the menu. Restaurants may also display a few higher-priced items, knowing you probably won’t choose them, but other items will look more reasonably priced in comparison.
This is yet another form of price framing, and it isn’t only restaurants that will do that. Online and brick and mortar retailers know that it can pay to offer really expensive merchandise that will make most of the other prices seem reasonable.
And despite the number nine being sort of magical when it comes to pricing, some eateries have adopted the advice championed by the late menu engineer Gregg Rapp: Menu prices ending in .95 seem friendlier than those ending in .99, which are associated with value and cheapness.
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11. Price Anchoring
Department stores do this all the time, particularly with clothing. You see a $76 shirt on sale for $38 and think you’re getting quite a deal. Of course, the store never intended to sell the shirt for $76. The plan all along was to charge consumers $38. The retail industry calls this “price anchoring.”
JCPenney famously tried ending price anchoring in 2012, simply offering low prices without marketing tricks, but customers stayed away and sales plummeted. The CEO was fired, and the store went back to price anchoring. Apparently, shoppers enjoy being duped.
12. Freemium Offerings
The freemium business model is often used with software, says Danielle Fitzpatrick Clark, CEO and founder of Influence Builder, a marketing firm in Charlotte, North Carolina.
Retailers will offer a free version of software with limited features, or a freemium, as well as a premium version (one you will most definitely pay for).
“Once users are hooked, they’re more likely to be willing to pay for additional features or capabilities,” Clark says.
There’s nothing wrong with retailers doing this, of course, but if you are trying to save some of your cash, assuming you like the free version of whatever you’re using, you are on a path for eventually (probably) spending money.
13. Decoy Pricing
Clark says that you’ll see this a lot with software and various membership pricing online.
“This involves setting up your tiers so that one option — usually the middle one — seems like a much better deal. This can encourage customers to choose a more expensive option than they might have otherwise,” Clark says.
If you’re trying to visualize that, imagine a service that offers you two features for $4 a month, nine features for $8 and ten features for $20. The service may hope you pay $20 a month, but they really want you to pay $8 a month instead of $4.
14. Bundling
Insurance companies are well known for doing this, but a lot of companies do this, such as streaming services and cable companies.
“Combine several services into a single package at a slightly discounted rate compared to purchasing each service separately,” Clark says, explaining how it works. She says that companies know that customers or clients might be tempted to spend more upfront to save in the long run.
15. Loyalty Programs
Yes, loyalty programs are good for the customer. Become a customer member of a business, and you’ll get perks and discounts — but only after you spend a lot of money. And, of course, you may find yourself reluctant to go to the competition because of loyalty points. If you’re just several dollars from getting a future discount on a meal at a restaurant, for instance, you may decide to go to the restaurant that has a loyalty program instead of trying something new and possibly cheaper.
In other words, businesses know what they’re doing. There’s no sleight of hand, and no hidden rabbits, but when you whip your credit card, you still be marveling at what just happened. When it comes to pricing tricks, retailers are very good at their craft.
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15 Ways Companies Are Tricking You Into Spending More originally appeared on usnews.com
Update 06/22/23: This story was previously published at an earlier date and has been updated with new information.
