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

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

#231

Post by aembleton »

mrhappyunhappy wrote: post #143
jamiethompson wrote: post #99

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…

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 expe…

It's full price the rest of the week so that on Friday it looks like a good deal. How do you know what the actual value is? You only know its value from the price charged during the rest of the week.

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

#232

Post by mikeash »

mcv wrote: post #225
mikeash wrote: post #223

Earlier quoted context omitted.

But there is no additional information in the general case. The amount charged for shipping is completely arbitrary. All you’re being told is that the price P is actually the sum of A + B, where A and B are just some amounts. There are exceptions to this. For example, I trust McMaster-Carr to charge me whatever they get charged for shipping, which is good because they won’t tell you in advance what it will cost. But…

By that argument everything is "just a number". It's still part of the sum. For example, if C sells something else that I want that's also much cheaper than a the other shops, and it won't increase shipping costs much, then that's the better option. If not, I may continue to shop around until I find a shop that combines low item price with reasonable shipping cost.

The sum is all that matters. The rest is just a weird number game.

As you say, your store preference depends on various factors. If C’s shipping costs are structured one way, you’ll prefer them. Another way, you won’t. You have to know all those details before you can choose. That’s my point: ultimately, functionally, there is no difference between a random store that won’t show you prices until you give them your location, and a ransom store that shows prices immediately but won’t give you shipping costs until you give them your location.

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

#233

Post by aembleton »

vxNsr wrote: post #113

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 t…

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.

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

#234

Post by newnewpdro »

theli0nheart wrote: post #44
newnewpdro wrote: post #25

Earlier quoted context omitted.

That greatly depends on the things.

What's your point?

That your generalization does not generally apply, especially in an era of extremely miniaturized popular goods.

Consolidating the S&H into the item cost makes sense for a subset of situations sure, but there's a huge set where it's exploitive.

Amazon orders for example often can amortize S&H costs by shipping a single package containing multiple items sharing a common origin. I'd argue that's true for a huge portion of Amazon orders. It's simply not a good generalization.

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

#235

Post by theli0nheart »

newnewpdro wrote: post #234
theli0nheart wrote: post #44

Earlier quoted context omitted.

What's your point?

That your generalization does not generally apply, especially in an era of extremely miniaturized popular goods. Consolidating the S&H into the item cost makes sense for a subset of situations sure, but there's a huge set where it's exploitive. Amazon orders for example often can amortize S&H costs by shipping a single package containing multiple items sharing a common origin. I'd argue that's true for a huge portion…

I disagree that it's exploitative. It's simply easier. Recalculating shipping costs on a combinatatorial basis has a nonzero cost from a programming and operations POV.

Having a fixed per-item shipping costs lowers overhead drastically, especially for smaller sellers. Large sellers obviously have different customers and I doubt they get away with just multiplying PER_ITEM_SHIPPING_COST X NUMBER_OF_ITEMS (I didn't think that was the focus on the OP though).

I also disagree that it does not generally apply. Given two items, A & B, you might have the following total:

    A_shipping + A_price = A_total
    B_shipping + B_price = B_total
What you're saying is that:

    AB_shipping + A_price + B_price
But what I'm saying is that:

    A_shipping
In other words, no matter what, shipping more items does cost more than shipping less items. So it makes sense to charge more for it. How much more is a matter of economics.

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

#236

Post by Spivak »

chippy wrote: post #35
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.

>I actually prefer this Yes, this is why these tactics work. The human brain is being hacked by shady practices.

I don't think it's shady.

- If you return the item you will be refunded the total purchase price instead of the price of the item sans shipping.

- You know how much it will actually cost to own the item when its in your cart instead of hiding the cost until the last second when you've already committed.

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

#237

Post by Spivak »

wil421 wrote: post #121
scraft wrote: post #93

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 u…

I agree with you. Generally I shop at the same grocery store. When certain BOGO items go on sale I know to buy because I can ball park the usual price. BOGO chicken breast, pork tenderloin, certain tolitries, yogurt, and a few other things. I usually freeze BOGO meat but I can see how it can go bad and you lose money. My wife and I usually recognize the good deals. We avoid buying stuff we don’t usually eat just beca…

And if you don't shop at a store often enough to figure out the real price of goods using one of those historical price sites can help you figure out if you're actually getting a good deal.

The 'true price', if you can say such a thing exists, of an item is almost always what it periodically goes on sale for. If you watch the historical pricing it will dip to a specific price anywhere from 6-24 times a year. As long as your happy with that price then feel no shame for pulling the trigger -- if not then you at least know when it really is on sale.

Example: my personal vice is Diet Coke. The true price in my area is $0.25/can but it often retails at $0.41/can to make it seem like a sale. I will buy in at $0.25 but it's not a real sale until it hits $0.20.

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

#238

Post by Spivak »

hakfoo wrote: post #219

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…

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.

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

#239

Post by Spivak »

mrhappyunhappy wrote: post #143
jamiethompson wrote: post #99

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…

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 expe…

You would have to have some insider knowledge to know for sure because both options are possible. But regardless if something is a loss-leader or not I typically shop with the rule that any item that routinely goes on sale for $x has a true price of at most $x.

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

#240

Post by brewdad »

jghn wrote: post #226
mrec wrote: post #167

Earlier quoted context omitted.

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.

Bottled beer does start to acquire off flavors over time

If you are the type who only drinks one bottle of beer per month, you really need to just walk away from the multi-bottle "deals"
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