
The shady economics of ‘buy one, get one free’ deals - zzaner
https://thehustle.co/are-buy-one-get-one-free-deals-worth-it/
======
rlue
What makes this really interesting is how living in an economy where prices
are both set by the seller and non-negotiable causes consumers to equate
asking price with value.

As a consequence, BOGO feels like a better deal than one item at 50% off MSRP.
A 50% discount is a change in the asking price; the value of this item must
have depreciated in some way for the seller to want to get rid of it (e.g.,
this garment is going out of season), and the price I'm paying is a fair deal
that I'm happy to accept because I don't need to indulge in extravagances.

But in a BOGO deal, the asking price hasn't moved (or, as the article
discusses, may actually be inflated); the fact that I paid full price means
that it retains its original value, and the one they throw in is simply an
enticement. In other words, I purchased an extravagance at full price, but it
was a deal because I walked out with two. The amount paid is double the
previous example's, but the perceived value is fourfold.

This isn't even getting into the actual value of perceived value (cf. the
sticker price of wine vs. its perceived quality). Really interesting stuff.

~~~
pattle
> This isn't even getting into the actual value of perceived value (cf. the
> sticker price of wine vs. its perceived quality). Really interesting stuff.

I fall foul of this trick quite a lot when food shopping. For example if I'm
buying a box of cereals and I see one is priced at £1.80 and another is priced
at £2.50 but is on sale from £3.50 I'll buy the more expensive one because I'm
under the illusion that I'm getting a good saving and a better quality
product. In actual fact though I've just spend quite a bit more for a
marginally better, if not the same quality item.

~~~
maaaats
Even without discount on the more expensive one, it can be used as a marketing
trick to make you buy more expensive. For instance offer three versions of a
product: $1 branded as cheap/bad, $2 branded as good, $5 branded as luxury.
The last one exists mainly to anchor the value of the $2 as also cheap and to
make you buy it. If one only had the choice between $1 and $2, most people
would choose $1 option.

~~~
chriswarbo
I agree that there's been a move to split "Store Brand X" into "Store Basics
X", "Store Brand X" and "Store Finest X", and that the "basic" product is
often perfectly good.

However, for broader product categories, there's also a tendency for the most
and least expensive products to be outliers, with the cheapest being barely
enough to justify the label and the dearest being aimed at rich suckers. Hence
the heuristic of getting the 2nd cheapest (especially if it's a one-off
consumable, where savings won't accumulate); or, if splashing out, getting the
2nd most expensive.

In my experience this definitely applies to things like wine and chocolate,
where the scale is roughly:

    
    
         |
        Q|
        u|          x
        a|             x
        l|   x  x     x                                x
        i| xx  x
        t|       
        y|     
         |x
         +----------------------------------------------
                Price

~~~
rlue
In some cases, businesses know consumers are following some heuristic like
this, and counter-strategize accordingly (or so I've heard). According to this
2013 blog post[0],

> Restaurants realize that many people won’t order the least expensive wine
> (no one wants to look like a cheapskate!) so they often go for the second
> cheapest. That’s exactly why it’s often the most marked-up bottle on the
> list.

[0]:
[https://web.archive.org/web/20131210062034/http://www.urbans...](https://web.archive.org/web/20131210062034/http://www.urbanspoon.com/blog/2013/12/10-things-
restaurants-arent-telling/)

------
chrisdone
I feel that there is a wealth/background effect here that could be studied
somewhat too. I think people who don't have to worry about money are less
likely to pay any attention to discounts and deals.

Having come from a council estate, there is a certain mindset behind getting a
deal for everything, making your little money go as far as possible, buy one
get one free, or discounts on anything, or coupons to get into restaurants or
discounted vacations, or companies that "get you deals" on all your electric,
gas, TV, internet bills, 8 packs of cheap beer, etc. are all seen as victories
and you are crazy for not taking advantage of them. There's an emphasis on
getting more quantity for less money. That's easily exploited.

~~~
hannob
I don't have hard numbers to quote on this, but I'm very convinced that you
end up paying more in the end.

From my own experience and pretty much every one I talk about this, people
have a tendency to buy things they'll never need. (I constantly try not to do
that, but it takes active thinking about it all the time.) No discount deal is
cheaper than the one where you don't buy something you don't need.

Then there's underestimated costs that aren't immediately visible. If you buy
more stuff of items that you use over a longer timeframe you'll have to store
them. Which of course means you're paying rent for the space in your flat
that's taken up by excess stuff.

~~~
dazc
A long running promotion in Tesco is 3 bottles of any brand beer for £5.25. I
can't imagine anyone ever goes into a store with the intention of buying 3
bottles but if you just buy 2 you're misguided into thinking you'll lose out.

In reality, you're spending more and drinking more than you really want to.

~~~
mrec
It's not like bottled beer goes off, so unless you were planning to buy 2
bottles _and then never buy beer ever again_ , I don't see the problem.

~~~
ubercow13
It requires more self control not to drink the third one when it's sitting in
your fridge than when it's sitting in the supermarket

~~~
jogjayr
Easy. Don't put it in the fridge until you know you're going to drink it later
that day. Or quick-cool it by dunking in ice water for about a hour.

------
ChrisSD
> A coffee mug that usually sells for $10 + $3 S&H will go for $13, with FREE
> shipping.

I actually prefer this. It's much better than shops that activity try to hide
shipping costs until the last moment. Also it makes comparing prices quicker.

~~~
dalai
On the other hand, if you want to buy two of them they cost $20 + $3 S&H or
$26 with free shipping.

~~~
glastra
S&H is not always fixed-rate. In fact, "handling" two items should cost more.
Shipping more weight should also cost more.

~~~
elcomet
More than one shipping cost, yes, but it should be less than twice the
shipping cost. Otherwise you could just order the items separately.

------
richpimp
I recently went to a department store called Kohl's for the first time with my
wife, who'd been shopping there for years. For those unfamiliar with this
store, think something similar to a JC Penney's. What struck me was that above
every item was some digital signage showing a discounted price or promotion
(B1G1 Free, 25% off, etc.), along with the MSRP price. So basically, anything
I looked at seemed like a great deal. They also have a rewards program whereby
you get "Kohl's cash" whenever you reach some threshold for purchases
(something like $5.00 Kohl's cash for every $100 spent), which effectively
gives you a discount.

Of course, I soon realized that this was all simply a tactic to encourage
people to continue to spend their money in the store, an effective one at
that. The "sale" price was really no different than the standard price at any
other retail store. It was just the perception of getting a good deal and
triggering the dopamine receptors in the brain. I told my wife this, but her
reaction was one of incredulity. Her thinking was she was saving money by
shopping there. It's such a simple, yet brilliant tactic. Make people feel
like they're getting a good deal, and they'll spend more money than they
otherwise would.

------
chippy
> Most online clothing brands offer ‘free’ shipping, with the catch that you
> have to meet a minimum purchase amount (often $100) to qualify. Some 58% of
> consumers will add additional items to their cart — often things they didn’t
> originally intend to purchase — just to “save” $5 to $10 on handling fees.

You will find people vigorously defending their behaviour when challenged on
this. For example: Amazon Prime.

Amazon Prime is a product that costs you money and makes you spend more money
on Amazon, and yet people will defend their spending saying that they are
"saving" money.

The shipping is "free" but you have to spend £8 a month to qualify. If you
don't spend at amazon during that month you are still down £8 (that's about
£100 a year). If you spend something at amazon during the month you are still
down the £8 in addition to the money spent at something.

Amazon Prime is a shady product designed to get you to spend money at Amazon.

As the article says often you will find the same product for lower in other
places. You just need to do the sums. Another common defence we will see when
people respond to this is "Oh I know it doesn't save me money, it's the
convenience".

Retailers love making their customers comfortable and not thinking about these
shady offers. Imagine having millions of customers so happy they will pay more
money to you _and_ defending this very process.

Now... there's also the shady dark patterns the company uses to sign you up
for it and make it it harder for you to cancel, but that's another thing!

~~~
porpoisely
I'm embarrassed to say Amazon got me with this trap a few times. I'm at the
checkout with a $19 mouse but amazon reminds me that I could get free shipping
if I get to the $25. So I go back and look for something I need for $6 bucks.
Can't find anything I need for $6 bucks so out of frustration I somehow end up
with a $70 worth of stuff I don't need just to save a couple of bucks on
shipping.

~~~
mneubrand
What worked for me is to settle on a generic filler item. Personally I use
toothpaste. Costs a decent amount, can be stored for a long time, doesn't need
much space and I'll need it eventually. This way I don't go looking around
randomly but just always fill the gap with that item.

------
scraft
Buying the right BOGOF items saves money. For instance, after spending a lot
of time trying different options, I now know exactly what face soap I want and
I also know the price it sales for. From time to time, it'll be sold as a
BOGOF, so providing the price makes sense (i.e. it is the normal price or less
than 200% of the normal price) then it is a good buy (it has long shelf life,
and will always be used).

I use up about 1.5 loaves of bread per week, so some weeks I buy one loaf,
some weeks I buy 2. If it is a week where I only need one, but it is BOGOF I
just buy 2 and put on in the freezer (and then take it out the following
week). It is a similar story for cheese (although that doesn't need to be
frozen, staying in the fridge, sealed, lasts for long enough).

One of the bigger savings we have got from a food perspective is to move
towards making a 'menu' of food we are going to eat that week. Then buying the
ingredients needed for each dish. This means little or no wastage (good on so
many levels), being able to buy at a good price (rather than not getting
something required then picking it up at somewhere convenient buy more
expensive halfway through the week) and knowing the quantities up front makes
it easier to either buy in bulk, or knowing when a deal that involves extra
quantity will be suitable.

The above approach has also meant eating much healthier food, not finding
ourselves in a position where we order take away because we don't have
anything in. Ensuring we have not only meals planned, but healthy snacks
(fruit etc) factored in too. It isn't a binary choice of by doing this we get
everything 100% perfect, but it has been a hugely noticeable improvement.

I have read several times that some of these approaches and typically favoured
by those who have more disposable income, which isn't ideal, as we really want
those with less income to be getting all the good savings to try to ease/stop
the wealth gap.

~~~
austincheney
> I have read several times that some of these approaches and typically
> favoured by those who have more disposable income, which isn't ideal, as we
> really want those with less income to be getting all the good savings to try
> to ease/stop the wealth gap.

The disposable nature of income is orthogonal to wealth. It is possible and
common to be wealthy and still be broke. Consider the pro athletes earning 7-8
figure income that are still forced into bankruptcy. It is also unrealistic to
think people who are weak at saving money need a nanny to follow them around
and police their spending habits in an effort to close the wealth gap.

The most straight forward means to close the wealth gap is to tax capital
gains as regular income and incentive spending from the wealthy with a
punishing estate tax.

~~~
sokoloff
A punishing estate tax probably does more to incent trust formation, life
insurance sales, minority ownership transfer structures, and other such
mechanisms to bypass the estate tax than it does incremental spending.

It's largely unprepared idiots that pay any substantial amount of estate tax.

------
Vinnl
I tend to make a conscious effort to ignore "deals". As far as I know, the one
case in which a deal is actually advantageous as a consumer is when that deal
encourages consumers to buy more of a certain product at the same time, and
the merchant passing part of the scale and predictability savings on to the
consumer. For example, if you buy tooth paste every now and then anyway,
buying it at the same time as many others might make it cheaper to offer that
tooth paste. Or for example having the option between essentially equivalent
meal ingredients, more people cooking the same meal at the same time can allow
for offering those ingredients more cheaply.

In most cases, however, it feels like they only benefit the merchant, by
manipulating the consumer to buy things they don't need, or more expensive
things.

I don't think the cost savings I'm missing out on by not making purchases in
the first category outweigh the extra costs I avoid by also not making
purchases in the second category.

That said, I'd love to hear of more ways of how deals can actually benefit
both consumer and merchant.

~~~
wdutch
there's a tactic called a loss leader where the merchant has a discount and
sells a product at a loss to get people into the store (and hopefully buy
other things that make them a profit). Loss leaders are pretty hard to spot
unless you actually know the normal retail price

~~~
Vinnl
Right - I thought of mentioning it, but then decided it was part of the
category "making me buy more expensive things". Presumably, I wouldn't have
gone into that store otherwise, e.g. because it's more expensive. A similar
trick is selling a certain product (e.g. an ingredient) at a loss, because it
is often bought together with more expensive products (e.g. the rest of the
ingredients of the typical meal).

Of course, you could still benefit from this if you were to visit that store
anyway, or would have bought those products anyway. However, that's still the
case in my "ignore deals" strategy: I don't actively _avoid_ deals, I just try
not to use them as a reason to buy something.

------
maaaats
Up until 2009 in Norway, it was illegal to advertise products with unrelated
additions ("tilgift"). Not strictly related, as here it's the same product.
But this made it illegal to do promotions like "buy our car, get a free iPad",
"buy this coke, get a chance to win prices". I think consumers wanted the law
gone, as it looks like we missed out on deals other countries had. But it
makes it harder to compare and tricks our brains.

~~~
mcv
So even on an electoral level, consumers get fooled by this and want access to
shady deals. That's going to make it really hard to get fair consumer
protection laws.

(Though maybe it's not surprising that people get fooled in politics.)

------
ocfnash
I quite enjoy mentally parsing these "offers" in logically equivalent ways.
E.g., "buy one get one free" as "only sold in units of two" or even "each
purchase of one requires compulsory purchase of a second".

As a child I remember considering the difference between "extra free" and
"free" which I used to see on cereal boxes. Sometimes the box claimed "10%
free!" but other sneakier boxes would claim "10% extra free!". The latter
allows the marketer to quote the same nominal figure for a smaller absolute
quantity.

~~~
thaumasiotes
> Sometimes the box claimed "10% free!" but other sneakier boxes would claim
> "10% extra free!". The latter allows the marketer to quote the same nominal
> figure for a smaller absolute quantity.

I'm not sure they're trying to be sneaky. The difference is too small for
anyone to care about:

\- 10% free! (purchase price pays for 90% of the cereal)

\- 10% extra free! (purchase price pays for _91_ % of the cereal)

(Also, it's the first option that indicates a higher unit price, not the
second.)

~~~
ocfnash
Actually I think we're in agreement here: I didn't make it clear but the
nominal figure to which I was referring was the magnitude claimed free. By
saying "extra free" they get to write down 10% instead of 9%.

I also agree the difference is small in this case but I'd argue:

    
    
      * Small wins are still wins.
    
      * The difference is not so small with bigger percentages.
    

Imagine I decide to tweak my margins for a time and sell 1.5Kg of cereal for
the price I previously sold 1Kg. I could say "33% free" (relative to old
price) or "50% extra free".

------
flavor8
We're staying in Nashville overnight on our way somewhere else and enjoyed
walking around on a weekend evening.

We noticed that all of the stores selling cowboy boots (and there are
multiple) have a "buy one get two pairs free" offer. All boots in the store we
checked out seem to be priced at $300+. So, instead of simply offering
discount boots at ~$100, they're leading you to think you're getting
$300-quality boots and $600 of "free" value in the extra pairs. Framed like
that, who could possibly refuse?

------
afpx
I’m very interested in knowing what proportion of retail revenue comes from
these types of dark patterns. Is it even possible to come up with a number? If
so, I’d be willing to help fund the research.

The other day a friend and I were discussing the “take X% off your entire
order” coupons. These seem to be very common, lately. She mentioned that she
recent used one on a cart of $100 in items. She expected a $20 discount. But,
to her surprise, she only received $2 off. Apparently all but one of her items
were ‘restricted’ items.

It seems like many companies find it easier to trick people than to actually
provide great service or products.

~~~
tyingq
"Free shipping" is a funny one. For smaller businesses, it's basically
subsidizing far away customers with nearby customer money.

I offer it not because I want to deceive people, but because we sell more that
way. People like predictable upfront prices without having to tell anyone
their location.

It is, of course, not "free". We just calculate the average shipping cost and
pad the price.

~~~
hopler
How much does shipping cost actually vary? I always assumed that first//last
mile handling of a package dominates over the fuel/depreciation cost share of
driving the item farther.

~~~
tbirdz
For usps rates, see here:
[https://docs.google.com/spreadsheets/d/1hyyaAYoi2P_CRWwrUJhB...](https://docs.google.com/spreadsheets/d/1hyyaAYoi2P_CRWwrUJhBPOaJC5YBJuwIZtg4OVQz1NE/edit#gid=1968755870)

I don't know how much ups/fedex costs.

------
samstave
Tangentailly related; i recently needed to buy a new shirt, where in the past,
i had shopped at Express for some work shirts - but havent been in their store
in several years - i went in as they were having a 40% off store wide.

Their shirts, which i used to have dozens of - are now priced at $69 per
shirt... less 40% for this sale.

Ive never paid $69 for one of their shirts in the past. So the 40% off now
reflects what i ised to have paid. So i feel they raised the prices of their
shirts, then hold frequent 40% off sales to lure in traffic of people thinking
they are getting a great sale - only to pay what the full retail of the shirt
used to be.

So Express literally found a way to inflate sales of product through this
tactic.

~~~
tych0
JCPenny very famously nearly went out of business because they do this all the
time, but then tried to revert to just pricing things normally. People thought
they weren't getting deals any more, so they stopped going there.

------
telesilla
My local supermarket does this all the time to my great annoyance, I never
thought about the mathematics of why they don't just discount the item. At
least it's better than the kind of deals that abuses people's misundertandings
of mathematics entirely, such as
[https://www.telegraph.co.uk/finance/personalfinance/money-
sa...](https://www.telegraph.co.uk/finance/personalfinance/money-saving-
tips/10986643/Supermarket-fake-offers-in-pictures.html)

~~~
Shivetya
Here in the Southeast the grocery chain Publix is pretty much the BOGO chain,
as in you buy stuff that is BOGO and take care otherwise. Their prices are
standard fare for a chain grocery and the standard price of the item falls in
line with other chains. Now for the most part any serious saver would BOGO and
then hit up Wal Mart or Aldi to finish out their savings.

One interesting note is that in general you don't have to buy two items as
part of a BOGO, you can buy one at half price. Now this is not true as some
manufacturers, namely Coca Cola, require the purchase to be made as described.
Meaning if its buy two get one you must take all three. They even get silly
with Publix in that there will be buy two get two with Coke products that, you
guessed it, you have to have four of the product to get it at the price of
two.

------
billpg
My local pizza shop offers "Buy one get one free" and "Free delivery".

They also offer a discount if you only want one pizza, and a discount if you
collect instead of having it delivered.

~~~
vxNsr
> _and "Free delivery"._

I'd argue this is legitimate, or at least everyone is footing the bill when
you request delivery. But that's no different than everyone footing the bill
for having tables and chairs in the shop.

~~~
mikeash
A discount for getting it yourself is the same as charging for delivery,
though.

And “free” delivery never is, at least in then US where tips are expected.

~~~
vxNsr
Rarely is there a discount for getting it yourself. usually the price is the
same and either they charge for delivery or they don't.

~~~
mikeash
The shop discussed in the original comment does it.

------
jamiethompson
I think the counter argument to this is non-perishable food and other
groceries.

There is a certain brand of shelf stable non-dairy milk that my family use a
lot of. The usual price is £1.50 a carton. Every few months there is a 3 for
£3.00 offer. Now this is obviously a ploy to get you to buy more than you
needed and also to appeal to new customers.

But I use these offers to stock up on weeks worth of the stuff. If has a shelf
life of over a year so it's a no brainer. I hardly ever pay full price.

~~~
mrhappyunhappy
I’m curious to know what’s happening with our supermarket ice cream discounts.
Every Friday all ice cream is 50% off and as you’d expect a lot of people buy
their ice cream on a Friday. The rest of the week it’s full price. Does that
mean they are taking a profit hit on Friday just to move inventory or is the
ice cream marked up higher than their ideal selling price which would be the
standard profit margin they expect on Fridays? Not sure...

~~~
Matticus_Rex
They're using it as a loss leader: taking a cut in profit or even a loss to
pull people into the store, where they're likely to buy more than enough to
make up for it.

------
kabacha
I've been living in Thailand for a while now and the market is so unregulated
and abused by these sorts of deals.

A big super market near my house runs 2for1 buns every day for the past year.

I've got desensitised to the point where I don't even see the "original price"
anymore. The deal price is just the real and only price. The only real deals
are the "almost expiring" price reductions super markets put out before
throwing out old food.

I wonder if in the grand scale of things this abuse backfires or I'm just a
rare case as a foreigner.

~~~
nickjj
Are regulations supposed to stop that behavior?

There's plenty of grocery stores in NY that continuously run the same
"special" on the same items. I've seen the same hot dogs on sale for the same
price for a year.

~~~
vxNsr
Yes, there are laws about how long a sale can be, if a product is on sale for
a significant amount of time the seller has to make that price the actual
price and cannot advertise it as "on sale." Likely those stores run afoul of
this law but are too small to be prosecuted by the DA/FTC.

------
consp
Fortunately some of this (bloating the price just before a sale to cover the
cost, note: e.g. day before) is illegal where I live. Though it doesn't stop
shops from trying. It does give the customer some extra power. If for instance
the shop fails to sell all stock and dumps it afterwards you can try to claim
the difference as this falls under deceptive practices.

The buy one get two variant is fine as long as there is actual profit to the
customer and no shady 'you still pay the same but it looks different' offers.

~~~
JeanMarcS
Same in France. So when sales time arrives, you can see some items prices
rising up a week before (which is, de facto, legal as long as you do it in
advance)

~~~
karambahh
The rules are slightly more complicated.

You are only allowed to discount items already in stock a month before the
start date[0] That's why the back of the shop is fully loaded by boxes a month
before the sales period starts.

The rules seem silly because it's an open secret, all companies jack up the
price and stock up just before... but you'd be hard pressed to find actual
proof:

"I ordered 50k items to the supplier just 30 days before, I meant to buy only
50, fat finger mistake, so we had to discount them".

"Yes, the reference price is based on the highest price we had on record among
our 500 stores. Yes, I know it was more than twice the median price, fat
finger mistake but hey, who does not make mistakes, 14€99 is too similar to
5€50..."

[0][https://www.service-public.fr/professionnels-
entreprises/vos...](https://www.service-public.fr/professionnels-
entreprises/vosdroits/F20566)

------
hakfoo
I suspect a lot of the BOGO deal structure is to exploit the consumer who
intentionally buys only what he can use.

Supermarkets here have gotten big on "buy one get (1, 2, or even 3) free" for
large meat packages (racks of ribs, for example), but keeping the price tag
high-- say $12 per pound. If you fully exploit the offer, you're effectively
paying a bargain $3 per pound, but that requires a lot of fridge space to deal
with four big packs of perishable meat. The consumer who says "I only need one
or two" is being gouged for NOT wanting to throw rancid leftovers away.

A similar related gimmick are the "buy N, save $M deals." If you buy any ten
of a pool of random items, they knock off $10 from the order, but if you only
need 9, or 1, you're paying full price.

There's definitely been a swing from "everyday low prices" to "gimmicks and
games." Everyday low price became "3-day sale" became "only with club card"
became "only if you install our terrible app and explicitly select you want
the promotion ADDED to your club card."

I think the ultimate goal is to get where they can advertise aggressive
discounts, knowing they don't have to give them to anyone but the people most
willing to jump through hoops to get them.

~~~
Spivak
So price discrimination. I don't see any problem with it. People who are the
most price sensitive will jump through hoops and be rewarded for it.

------
whoopdedo
A related and greater rip-off is the discount cards that give you coupons
after a purchase. Consumers become addicted to these "deals" that make it seem
as if they're paying a very small amount for something. When in fact they paid
up-front with the original overpriced purchase. It amounts to an interest-free
loan to the retailer that is paid back to you with those coupons.

~~~
chippy
These cards are the original data tracking example as by using the cards you
give the retailer all your data including demographics of your age and
location etc. From what I recall retailers cannot use your credit card
purchase history for this, you have to use opt in and use the "loyality"
cards.

------
User23
My mother always said "50% off what?" Obviously when the merchant sets the
nominal "retail" price to whatever they want, they can set the discount to
whatever they want too and maintain their profit margin. This is basic algebra
solving for one variable given a desired "discount". It's amazing how
effective it is though.

~~~
simonh
I'm only (vaguely) familiar with the rules in the UK, but they include tests
to ensure the 'was' price was actually a genuine usual selling price. This
includes tests that the 'full' price must have been in place for longer than
the promotional period, that it must have been recent and that significant
sales were made at that price. Buy one get one free also has to mean you get
two equivalent or similar products. Compliance is also monitored and enforced.
I'm not claiming it's perfect, but by and large over here you can have
reasonable confidence these promotions are usually valid.

Conversely my wife is Chinese. Over there 'buy one get one free' usually means
something like buy one dress, get one flimsy, non colour-matching belt free.

~~~
thaumasiotes
I'd be pretty surprised if British law prohibited "buy a dress, get a belt
free" promotions.

~~~
simonh
If you promote it as such, or 'free belt with every dress' then sure. You
can't market it using the phrase 'buy one get one free' though.

------
legatus
Does anyone know of a book (even better a textbook, if possible) detailing
these strategies? This article is about the "BOGO" deal, I'm interested in
reading about other kinds of these strategies, and why they work. If anyone
has any recommendation, especially for more academic stuff (textbooks or
papers), I would greatly appreciate it!

~~~
joshvm
Not a textbook, but Freakonomics is in that ballpark.

It's (un-) surprisingly hard to find academic information about this on Google
because all the results are click bait articles about how to improve sales,
rather than peer reviewed theory.

~~~
legatus
Thanks, I'll definitely look into Freakonomics. I agree it's pretty hard to
find info on this topic from an academic perspective, and it's really
unfortunate, as I believe it is important for the wider public to understand
these tactics and why they work.

~~~
yitchelle
The book "Predictably Irrational" by behavioral economist Dan Ariely that was
mentioned early on in the article is also a good read. It does not directly
related to pricing strategy but provide good insight to the irrational
decisions that we make, and the BOGO falls into that category.

In a similar vein, I have just finished "Nudge: Improving Decisions About
Health, Wealth, and Happiness" by Thaler and Sustein. This might be worth a
look as well.

------
dspillett
Everything even vaguely commercial with the word "free" attached is shady. I'm
in a minority here (I must be, otherwise it would stop being common because it
wouldn't bring in enough marks) but I've grown cynical enough that the word
actually puts me on guard and I go searching for the small print, or it just
puts me off completely if I don't have time for the small print.

It isn't just BOGO offers, anything free is suspect:

* Just pay postage! (postage is nearly as much as the item costs on Amazon/eBay/others with delivery included, and it'll take up to six weeks for your item to arrive)

* Do the Great North Run for free! (... plus a £320 charity pledge)

* First month free! (if you don't cancel 27 days before the free month ends you'll be paying for the service for at least 6 months afterwards)

~~~
chii
> * First month free! (if you don't cancel 27 days before the free month ends
> you'll be paying for the service for at least 6 months afterwards)

yes, this is a terrible bait and switch - and should be illegal unless the
fine print isn't so fine that nobody reads it.

~~~
tatami
I also had services where the free trial stopped working as soon as I
cancelled. Which I did so that the trial doesn't spill over into an
abonnement.

------
mojuba
The shady economics of a non-functioning close button of an annoying
"Subscribe to newsletter" popup. Bottom line: it works but also sends a
negative subliminal signal to the visitors that a given business is desperate.
Just something for website owners to have in mind.

~~~
mcv
I increasingly tend to close popups on websites by deleting them from the DOM
through dev tools. Not the most user-friendly method, but it's quite thorough.

~~~
mojuba
Doesn't always work though, some web sites also manage to block scrolling of
the main content which may not always be easy to figure out (esp. on messy web
sites with megatons of JavaScript code, HTML and CSS).

And surely there are browser plugins that help you remove annoying DOM
elements in one click?

~~~
icebraining
uBlock Origin has a visual picker, which also saves the blocking rule for
future visits: [https://github.com/gorhill/uBlock/wiki/Element-
picker](https://github.com/gorhill/uBlock/wiki/Element-picker)

~~~
vxNsr
Only issue is the scrolling, how do I make a rule that blocks the inline js to
prevent scrolling in the body elem. or worse when it's not inline.

~~~
mcv
I usually look at the body element and start removing classes there. That
often works. But I suppose a plugin should be able to figure out automatically
why something isn't scrolling.

~~~
mojuba
Or a shortcut for non-technical people: outline.com. Works perfectly even on
most paywalls, not just annoying popups.

------
2T1Qka0rEiPr
Minor comment, but I'm pretty sure in Ariely's experiment he dropped _both_
prices by 1 cent (i.e. the Lindt became 14 cents), hence the drop was
identical, but this completely shifted the purchasing decisions.

------
vxNsr
One way to combat this mentally is to have set prices for things in your
head... ie the price you feel each commodity should cost. Don't buy things
that deviate to far from that price.

For example I feel a nice non-iron, fitted, button down shirt shouldn't cost
more than $20, so I only buy when I see them at, or around that price, BOGO or
not (and I need one/two). Same goes for lightning cables, I'm not paying more
than $5/(10ft)cable no matter what material it's wrapped in.

~~~
aembleton
Where do you get the idea that the shirt should cost $20? Is that from the
prices you've seen at retailers? The same ones that run BOGOF promotions.

------
ksec
I think we need to cite those Study were done in US. And the results are
pretty much US specific. From my experience ( Retail is big, so it might not
be applicable to every category ) Buy one get one free or anything with the
word "Free" works in US, Works in UK, Kind of Works in EU, Doesn't work in
Asia. Or At least most of the SEA, China, Japan, Korea etc. The consumer
mentality is completely different, and in reality the 50% discount price would
work better.

Having it completely "Free" as the spend $12 Beer for Free T-Shirt example
doesn't work in Asia as well. Because you would soon realise these market wont
pay a $12 product to get a "Free" T-Shirt. It only works in Japan and Korea,
and that also depends on the products.

Generally Speaking, Discount is better than Free with Strings attached in Asia
Regions. Pricing Strategy, Consumer Expectation and Product Selection is so
vastly in every Asian Market are part of the many reason why many large
Retailers failed in China.

------
ocdtrekkie
This article of course totally ignored the scenario where the buyer is aware
of the going rate for a given item, and either stocks up when a sale happens
or waits until the price point they want to pay. The article basically is
suggesting "deals are bad" instead of what it should be saying, which is
"don't fall for bad deals".

~~~
ianai
I agree, in the mane. But I think their point isn’t for people who target a
specific good or service but who instead suddenly enter a market (purchase
something they wouldn’t otherwise purchase) because of a BOGO deal.

Quote “”Retailers are often as guilty as you can get with manipulating price
of an item,” says Cohen. “You’re often charged a price that nobody has ever
paid; anything that’s free is just carved off the regular price.””

------
dazc
A friend once pointed out a deal on Coca Cola in one store where 2 bottles
were actually cheaper than one single bottle. I reckoned the expensive single
bottles were only there to convince you that you were getting a great deal?

Coca Cola is, I think, the classic example of a product where fair cost has
become irrelevant.

------
beefield
Funny the title calls economics. But the textbook economics with its utility
maximizing rational agents is utterly incapable even accepting the _existence_
of this kind of phenomena, much less analyzing...

~~~
Matticus_Rex
Ah, the mythical caricature textbook economics that hasn't integrated bounded
rationality or behavioral economics. Funny how I only find that in internet
comments and not actual classrooms past 101 (which is too basic to get into
this).

~~~
beefield
I may be too cynical, but I assume most MBA curricula do not contain bounded
rationality ot behavioral economics at least as obligatory subject, but are
happily restricting themselves to the world view of 101.

~~~
Matticus_Rex
Business programs LOVE behavioral econ. You get Nudge and cognitive bias stuff
starting in undergrad business classes.

And other than the econ classes, business classes aren't modeling behavior or
doing much theory work, so they aren't making assumptions like rationality.

~~~
beefield
Actually my comments were not that well thought from the beginning...

------
lancesells
I just read the book "Dollars and Sense" and recommend it if you're interested
in this topic. It's kind of surface level but it does help explain the ways
people spend and think about money.

------
skizm
JC Penny almost went bankrupt when they tried to stop doing sales all the time
and just charge fair prices. People want sales, even if the item isn't really
cheaper.

------
HNLurker2
This reminds me of that Elon Musk meme where you buy glasses by searching
"x".the glasses are free but the transportation is like twice the price to
male em

------
runyor
This can be generalized to: Every time someone offers you a "deal of a
lifetime" it's a deal that mostly benefits him. If it doesn't screw over a
third person it usually screws you, and if it screws over someone else it
still might screw you.

That's why the smart man will find deals himself. E.g. instead of waiting for
a prospect from a cars dealer that makes him a good offer, he will study what
makes a good second hand car, when the prices of second hand cars are lowest
and then he will go and make an offer to a caring owner of a car to become its
second hand owner.

------
jacknews
I thought it was known as BOGOF?

~~~
klyrs
Payless Shoes is particularly egregious -- they have huge signs that say
"BOGO" but then the fine print says... "buy one get one half-off." And their
employees are apparently trained to say "buy one get one" until you arrive at
the till.

