Smart Discounting

13.07.2016 |

Episode #4 of the course Price psychology by Andy Luttrell


To me, some of the most fascinating stuff in price psychology is how sellers can present discounts. The question is: how can you make a discount seem like a really great deal?

Let’s say a company wanted to have a sale, and the original price of their product was $50. The lowest they can reasonably sell it for is $10. That’s already a good deal, but how can they subtly encourage people to see it as an even better deal?

One thing the company should consider is simply how the prices look next to one another. There are all sorts of visual tricks that make discounted prices look really low, and a bunch of studies have shown this to be the case.

To start, consider the size of the prices. I’m not talking about how much money it is. I’m talking about the literal size of the font on the page or screen.

Which do you think would be more effective? Making the original price larger or making the sale price larger?

A lot of people think that it would be better to make the sale price bigger. After all, that’s what you want to draw people’s attention to! The bigger it is on the page or screen, the more people notice and think, “Whoa! Look at that deal!”

It turns out, though, that it’s actually better to have the original price printed bigger. The reason is that you want the sale price to feel small. Sellers want people to think that the sale price is much less than the original price, so making it visually smaller should do it!

That might seem weird, but you don’t have to take my word for it. One study showed people an advertisement for a pair of roller skates. The ad had the name of the skates, a picture, and a description. According to the ad, the skates were normally $239.99, but they’re on sale for $199.99.

Everyone saw exactly the same ad…except for one little thing. Half the people saw a version of the ad where the regular price was printed a little bigger than the sale price, and the other half saw a version of the ad where the sale price was printed a little bigger than the regular price.

When people saw an ad where the sale price was printed in smaller font, they thought the sale price was less expensive, and they said they were more likely to buy the skates.

So it seems that this one tiny change to the way a discount was displayed affected people’s perceptions of the discount. The smaller a sale price looks, the smaller the price itself feels.


Recommended book

“Contagious: Why Things Catch On” by Jonah Berger


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