How to Beat Pricing Psychology
by CashTime Loan Centers
Have you ever found yourself spending more money than you planned to on certain items? You may have fallen prey to any number of tricks advertisers and marketers use to make their prices seem lower than they actually are, but don’t feel bad; it happens to the best of us. Savvy marketers understand the psychology behind pricing and use it to their advantage to drive consumer purchases. Techniques vary anywhere from removing the currency sign in front of a number to shrinking the size of the font used to make the number appear smaller. You may laugh, but consumer studies show these tricks work!
Advertisers know that emotion heavily influences purchases, large or small, so that’s what they appeal to in their ads. Psychology Today states that most people believe the choices they make result from a rational analysis of available alternatives. In reality, however, emotions greatly influence and, in many cases, even determine our decisions. Picture a television commercial for an expensive car; the price, if shown at all, doesn’t appear on the screen until the last possible moment. Before you ever see a price tag, you learn all about the features and benefits of the vehicle.
The beautifully filmed commercial will depict how it will make you feel when you slip behind the wheel, how great you’ll look driving down the highway, wind in your hair, passing all the other cars, and how envious the neighbors will be when they see you pull up to your home in your brand new vehicle. When the price finally does show up on the screen, it is usually accompanied by “affordable” monthly payments, with the lowest available interest rate prominently featured. However, when you drive to your local dealer to purchase this dream car, there’s no guarantee you will actually get the lowest interest rate, or that the payments will be affordable for you. But by this time, you’re so in love with the idea of the car and all the good things it will bring into your life, that you are motivated to do whatever it takes to drive that vehicle home.
Psychological pricing works, or it wouldn’t be used. If emotion is tied to most financial decisions, how can we beat the pressure to buy something we don’t need or can’t afford? There are some simple steps you can take to fortify your resolve not to make an unnecessary purchase:
- Plan ahead. Just as going to the grocery store without a list usually results in coming home with more groceries than you planned to buy, shopping elsewhere carries with it the same threat, so plan your purchases and stick to your list. When you plan for, save, and comparison shop for your purchases, you can often take advantage of discounts, coupons, and sale items.
- Establish a waiting period. Since most of us end up regretting impulse buys, set a new rule for yourself that you will not buy anything you haven’t already planned for until a waiting period has passed; it can be anywhere from one week to one month. In most cases, once the waiting period has passed so has the urge to purchase the item.
- Evaluate the true need. Before you buy, ask yourself if the item is going to add to your quality of life in some way, or help you reach a goal. Be honest, and don’t try to talk yourself into buying something. If you have planned for the purchase and it will truly meet a need, simplify your life, or add intrinsic value, keep it on your list.
- Avoid temptation. If the mall is your weak spot, stay away! If you don’t know something is out there, you won’t want it. Strolling through the mall and window shopping often leads to unplanned purchases, so avoid the impulse to buy something you’ll probably regret by not going to the mall in the first place. There are many other, less expensive ways to pass the time, like taking a walk in the park instead of in the mall. This goes for virtual malls, as well. Online retail sites can be just as tempting as brick and mortar stores, so avoid the temptation to browse online.
- Use cash. If you haven’t already cut up your credit cards to avoid increasing your debt, consider doing so. If you want to keep one card for emergencies, make it difficult to get to. In fact, freeze it; literally. Take your credit card and put it in a plastic baggie filled with water and stick it in the freezer. This forces you to thaw the card out to use it when you want to use it for a purchase. The time it takes to unfreeze your card could be enough to stop you from using it for non-emergencies. No fair writing down the credit card number and keeping it in your wallet!
By planning your purchases, establishing a waiting period and sticking to it, evaluating your true need for an item, avoiding temptation, and using cash you can steel yourself against falling prey to the tricks and techniques of psychological pricing.