When Is a Sale Not a Sale?

By David Geller   |   July 14, 2015

I recently visited a store offering “Buy One, Get Two Free.” How can any store offer such a remarkable deal and stay in business?

The answer is simple: the store triples the price of the item. The retailer prices a $50 shirt at $150, enticing its customers with an unbeatable deal, often good for a limited time. Customers pay $150 for three shirts, the same $50 they would have paid for each shirt without the deal. The store wants customers to believe they got two $150 shirts for free and feel pressured to buy now. In reality, the customer purchased three $50 shirts for $150. The savings are an illusion. Moreover, the deal might compel us to buy more shirts than we actually want or need.

Rationally, we know these offers are typically gimmicks, not deals. So, why do so many otherwise smart Americans fall for this marketing ploy? Because our emotions lead us astray. We crave the good feeling that comes with getting a great deal, so we allow ourselves to be swayed by these illusory offers.

How can we protect ourselves? We use our wisdom and our time to protect our money and ourselves. We can remind ourselves of the age-old wisdom that “when it looks too good to be true, it probably is.” Rather then leaping at the chance to “save,” we can take a little time to shop around and consider whether the promised savings are real in the first place.

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David Geller

About the Author

CEO David Geller co-founded the firm in 1991 and led the creation of Behavioral Wealth Management. Recognized on numerous prestigious "top financial advisor" lists, David is an in-demand speaker for professional groups and JOYN workshops. His writings have appeared in The New York Times, The Wall Street Journal and The Huffington Post.

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