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The shady economics of ‘buy one, get one free’ deals

thehustle.co

161–170 of 250 posts

Re: The shady economics of ‘buy one, get one free’ deals

#161
post #130

Earlier quoted context omitted.

That isn’t saving money it’s spending less money as I see it. If you took the surplus amount you would have spent and put that in a long term investment or savings account then I think you could claim a savings. Almost no one does this with day to day spending though so it’s best to view it as spending less. When you spend money you aren’t saving money. You are spending it. You might be spending less in a given situa…

You wouldn't see the following statement as correct usage? "I was going to run to [store x], but I wanted to see the new [store y] instead and it ended up saving me $[amount]." I'd agree that a "savings" figure on a receipt is bogus though, as it's comparing a price you wouldn't be charged with one you would.

In our everyday speech this is how people talk. So in that sense it is correct usage. I claim it is misleading to think this way. I think our speech has been affected by marketing and it’s caused a change in how we think about money.

Spending money is never a savings. All you can do is spend less than what you were willing to spend. I know our way of speaking isn’t going to change anytime soon but I hope to change the way people think about saving. I hear people who are broke talk about how much they saved in the scenario you presented. But they have no savings at all and it is bad for them to think they saved money when in fact they spent money. Spent money is not a savings.

Re: The shady economics of ‘buy one, get one free’ deals

#162

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...

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).

Re: The shady economics of ‘buy one, get one free’ deals

#163
post #160

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...

would it be under game theory?

There are papers modeling it in game theory, but you'll spend a lot of time on this in advanced micro, any behavioral or price economics classes, and any applied econ classes. The mythical textbook econ he's talking about is a meme.

Re: The shady economics of ‘buy one, get one free’ deals

#164

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...

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).

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.

Re: The shady economics of ‘buy one, get one free’ deals

#165
post #158
post #136

Earlier quoted context omitted.

"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.

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.

For usps rates, see here: https://docs.google.com/spreadsheets/d/1hyyaAYoi2P_CRWwrUJhB...

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

Re: The shady economics of ‘buy one, get one free’ deals

#166
post #149

Earlier quoted context omitted.

You're still paying for credit card transaction fees indirectly when you use cash. Since retailers are prohibited from charging discounts for cash purchases then to cover the card fees they raise the price for everyone. Cash buyers end up subsidizing card users.

In USA it is no longer legal to forbid cash discounts / CC surcharges. Still uncommon though.

[deleted]

Re: The shady economics of ‘buy one, get one free’ deals

#167
post #89
post #80

Earlier quoted context omitted.

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 u…

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.

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.

Re: The shady economics of ‘buy one, get one free’ deals

#168
post #94
post #29

Earlier quoted context omitted.

> 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 getti…

When it comes to commodities, the best thing to do is shop by unit, ignore the "sale price" and the msrp, look only at the cost/ounce or cost/unit most US stores list both on their price tags, though you have to watch out for when they use different measurements for directly competing products (ie kellogs sold by the ounce while store brand by the pound). In semi-blind taste tests I've always preferred the name brand…

> commodities

The issue for consumers is that every decision now is about weighing up brand differentiation - DTC is no longer about commodities, but about niches.

Unless you absolutely know the exact type of product you want (i.e. you definitely want some flakes of corn), my take is we're shopping in "ranges". e.g. I need something to eat for breakfast, and I won't be offended at paying more than £X for it.

I find it the same with soap - on a basic level, a 35p bottle of handwash is the same as a more expensive one, but I've now been primed that there's this range of prices I won't be offended at paying, and if something more expensive is reduced into that range, I'll snap it up as a "deal" because it was out of reach and now it's in reach.

Re: The shady economics of ‘buy one, get one free’ deals

#169
post #141

Earlier quoted context omitted.

What really annoys me though is Tesco displays the price per/unit using different units, so you're constantly having to figure it out in your head - one loaf of bread might display the price per 100g, another the price per 1kg etc.

In the US we take it to the next level by mixing in imperial measurements. I don’t know about most people but I’m using my phone for conversations between ounces, pounds, then some SI measurements, etc.

I am mainly using my phone for conversations too.

Re: The shady economics of ‘buy one, get one free’ deals

#170
post #80

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…

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 u…

My ex-wife loved "a deal". I had to throw away so much grout and so many mismatched cabinet handles it wasn't even funny.
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