The shady economics of ‘buy one, get one free’ deals • Hacker News Board

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

#181

Post by mikeash » Mon, Feb 18, 2019, 3:58 PM UTC

mcv wrote: post #23

ChrisSD wrote: post #4

> 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.

Shipping cost can vary a lot, though. Especially in the internet age where it's easy to order things abroad. When I order from a Dutch webshop or from amazon.de, shipping is generally free, but when I order from amazon.com, it's not. So that means the webship has to know where I live and what kind of shipping I want. Granted, Amazon probably already knows this, but when I use a new webshop, they can't know this, and…

What use is it to see the price of the item without knowing the shipping cost? It seems to me that what you’re really saying is that they need to know where you live and what kind of shipping you want before they can show you the real price.

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

#182

Post by Buldak » Mon, Feb 18, 2019, 4:03 PM UTC

hannob wrote: post #80

chrisdone wrote: post #60

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…

I've wondered if CostCo works along this principle. People like the idea of getting bulk rates for items. But even in cases where items really are cheaper per unit, it may not be an advisable purchase for most people if they don't really need or want as much as they are induced to buy.

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

#183

Post by mikeash » Mon, Feb 18, 2019, 4:04 PM UTC

vxNsr wrote: post #108

billpg wrote: post #49

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.

> 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.

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.

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

#184

Post by TeMPOraL » Mon, Feb 18, 2019, 4:10 PM UTC

vxNsr wrote: post #175

hopler wrote: post #153

Earlier quoted context omitted.

The name brands taste better because they have put more effort into researching weird chemicals that taste good

I’ve heard it’s kinda the opposite. Apparently, lotsa white labeled goods are manufactured in the same plant as the name brand stuff, by that brand, but to differentiate it, the brand will tweak the recipe slightly for the white label run.

I suspect (but never confirmed) that they have some "quality binning" at the factory; the runs closer to set quality get the "main brand" label, the slightly worse get the "value brand" label, etc.

That the cheap store brand is made by the same company that makes the expensive brands is true, one only has to check the manufacturer data on the label.

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

#185

Post by chriswarbo » Mon, Feb 18, 2019, 4:13 PM UTC

maaaats wrote: post #68

pattle wrote: 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…

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.

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

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

#186

Post by rootusrootus » Mon, Feb 18, 2019, 4:25 PM UTC

tgb wrote: post #127

hannob wrote: 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…

I consider myself reasonably frugal and thoughtful about money, but I definitely fell into one of these traps buying a suit for the first time. I went in with a specific sale in mind, they told me they had a two-for-one deal going so I might as well try on two colors of suits. But then it turned out the second suit was over double the price of the advertised sale price that I came in for (the first suit would have qu…

I did the same thing. I had a funeral to go to and needed a suit (of course that is not necessarily true but I did not know it then) and walked in the door at the Men's Warehouse and got hooked on the two-for-one deal. Spent a lot more money than I needed to, for my purposes I could have just gone to the Kohl's department store and picked up something inexpensive and it would have been functionally equivalent.

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

#187

Post by gbear605 » Mon, Feb 18, 2019, 4:26 PM UTC

whoopdedo wrote: post #125

0x445442 wrote: post #119

Earlier quoted context omitted.

> but I'm very convinced that you end up paying more in the end This is actually the same tact credit card companies use, even if the balances are paid off every month. That's why we still use budgeted cash from envelopes to pay for most things. The only payments we run through a card are fixed costs where the percentage paid back on the card exceeds the transaction fee if any.

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.

At least your money is often going to a local business rather than a big credit card company

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

#188

Post by rootusrootus » Mon, Feb 18, 2019, 4:27 PM UTC

Buldak wrote: post #182

hannob wrote: 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…

I've wondered if CostCo works along this principle. People like the idea of getting bulk rates for items. But even in cases where items really are cheaper per unit, it may not be an advisable purchase for most people if they don't really need or want as much as they are induced to buy.

I love Costco, but it is worth remembering that a good amount of the time even their per-unit prices are higher than the local grocery store. I still shop there, but I go for the stuff they do better than the other stores in the area, not for any kind of bulk price.

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

#189

Post by rootusrootus » Mon, Feb 18, 2019, 4:32 PM UTC

bena wrote: post #170

hannob wrote: 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…

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.

FWIW, depending on where you live check to see if there is a Habitat for Humanity ReStore near you. Better than dumping such things into the garbage. And for small projects, you can save a fair chunk of cash by shopping there. I used to get wood stain for a tenth of what HD would charge for the same thing.

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

#190

Post by samstave » Mon, Feb 18, 2019, 4:32 PM UTC

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.