The 11 Ways That Consumers Are Hopeless at Math
Tuesday, July 17, 2012 at 2:00AM Fascinating article from The Atlantic- taught me a few things.
"In his book Priceless, William Poundstone explains what happened when Williams-Sonoma added a $429 breadmaker next to their $279 model: Sales of the cheaper model doubled even though practically nobody bought the $429 machine. Lesson: If you can't sell a product, try putting something nearly identical, but twice as expensive, next to it. It'll make the first product look like a gotta-have-it bargain. One explanation for why this tactic works is that people like stories or justifications. Since it's terribly hard to know the true value of things, we need narratives to explain our decisions to ourselves. Price differences give us a story and a motive: The $279 breadmaker was, like, 40 percent cheaper than the other model -- we got a great deal! Good story."
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Reader Comments (3)
We are constantly being robbed while shopping, that's a certainty.
We had a known supermarket store in Portugal making 50% off on all products a couple months ago. People just went nuts, violence, conflicts, you name it. And... that put me to think: if they make 50% off on all products, are they losing money? No. So, in fact are we paying too much every week? Yes.
There was an inquiry and they didn't sell any product below the price of cost to them, so legal it is the 50% off.
and don't forget some of the 2 for 1 deals etc that can end up more expensive than just buying a larger sized item.....
some bulk buy items are not the same as buying separately. for examples, crisps (potato chips to our American brethren) in a bulk packet are only 80% of the weight of the individual bags. Sure, they are better value, but it narrows the difference.
I think the way that mobile phones are subsidized is a clear indication that people can't do maths at all. Some time ago I was in Carephone Warehouse looking at a Galaxy Note and I asked the price off contract and was told £600. I looked at the price posted in the shop, £100 up front and I think £30 per month for two years, I instantly calculated the total cost and the sales man seemed quite surprised, and when I said I'd rather buy outright and get a sim-only deal he queried my logic and said £600 seemed the expensive way to buy it!
The whole debate about tax here in the UK also shows it. People say that those who earn more should pay more tax. Well, they do! Tax is a percentage, it's already relative, not an absolute amount.