A Sucker for a Sale

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As late summer discounts reach a fever pitch, Jean Chatzky examines the psychology of bargains

I thought I learned my lesson. Last year, I participated in an insane experiment called “Six Items or Less,” where I picked six items of clothing and then wore them (and only them, with a few exceptions like underwear and exercise clothes) for a month. Initially, it was maddening. Then, it was freeing. And when I emerged from my self-induced clothing diet, I had a new theory on how best to shop. Clearly – since almost no one noticed that my wardrobe was on a continuous loop – volumes of clothing weren’t necessary. Better to behave like the French and buy a few pricier pieces that would last and that I really loved.

And then I was invited to a black-tie event where my host said “short cocktail” rather than “long gown” was the way to go. I had two of the latter, but my closet seemed lacking in the former. Yes, I had a few dresses but they screamed bar mitzvahs-with-friends – not gala-with-colleagues. I went shopping.

At Loehmann’s.

After an hour in the communal dressing room, I emerged victorious and excited. I found two dresses, one a little more conservative than the other. Each had a price tag of roughly $400. Each was marked down to about $100. Oh, and then there was a sweater dress I could wear to work. It was $150 marked down to $59. Add in my 10% discount and I took home all three for a little over $200. I told my husband: I scored.

And then the night before the event I put them on – again – and realized, I didn’t actually like either one of the dressy dresses: One was too matronly, the other too tight. Even the sweater dress was overly bulky. What I liked, it turned out, was the fact that I seemed to have gotten so much for so little. What I liked, it turned out, was the sale.

William Poundstone, author of Priceless, a book that explores the psychology of prices, says I am a sucker. OK, that’s not an exact quote, but reading between the lines, that’s what he means. “One of the things we know about prices is that deep down we don’t know what anything should cost,” he explains. “Our unconscious mind uses cues to decide if things are a good value or not. And that means it’s very easy to fool people.”

Cues like? Having an advertised reference price, which is when you can see that something that originally cost $49.99 is now down to $29.99 (or in my case $400 down to $100). “When you tell people about this, they say ‘I’m more reasonable than that. I know it never really sold for the higher price.’ But when we do the experiment, we see that we are all influenced,” Poundstone explains. “Take that as a warning – when you see a tag take a deep breath and realize you’re going to be psychologically influenced.”

Exploiting the fact that an offer is for a limited time only or that only limited quantities are available is also very effective, he says. That’s why Neiman Marcus, for instance, litters your e-mail box with notices that from 11:30 AM to 1:30 PM – for two hours, today, only – such-and-such boots or dresses or sweaters are going on sale. And why Gilt has been able to train a cadre of shoppers to log in, precisely at noon (EST, of course) like so many Pavlov’s dogs.

And then there’s bundling. Walk through the supermarket – particularly in these post-recessionary times – and you’ll see signs for, say, 10 bottles of Snapple for $10. “What that tells you [again, unconsciously] is that other families are buying ten. And for that reason, you’re more likely to choose to do the same, or at least buy more than you would have otherwise,” he says, thus explaining the vast quantities of chickpeas in my pantry. “Most of the time if you do the math on these deals, you figure out the price is about what you should have been paying anyway.”

I feel pretty stupid, I ‘fessed up to Poundstone. Don’t be too hard on yourself, Poundstone cautioned me. “We all like to think we’re very rational. That we can lay out the reasons we bought such-and-such thing at such-and-such a price. But all the research shows this is part of the way the human mind works. We’re all very suggestible.”

So what do we do? Any time you see a sale, he suggests, ask yourself if you need it. And ask yourself if you’d want it just as much at the original price.

Then, when logic fails you at Loehmann’s (or wherever), do what I did. Return. And go to Bergdorf’s (or wherever) and spend the same amount of money on a single, full-priced dress you love enough to wear for years to come.

10 comments so far.

  1. avatar Lila says:

    I have a favorite store which carries a lot of very nice petite sizes. I almost NEVER buy anything at full price, which I consider to be pretty expensive for their new arrivals. But I do shop and try things on, and if I like something… I wait. Eventually there will be a sale, and then most items will go into their online “outlet” for even lower prices. If the items I liked are still available in my size, great. If not… it wasn’t meant to be. So far I have not found myself pining for any of “the ones that got away.”

  2. avatar D C says:

    I’ve been looking for a cookware set for several weeks now.  Finally found one hubby and I agreed on — a little higher in price than I had thought we needed to spend, but with the sale, was just barely above my limit.  Was going to order it online, but no free shipping and I knew it would be heavy.  Then I saw that the nearest store had it in stock, so headed over to get it.  Originally $360, on sale for $159, I walked out of the store, after tax, paying $148!  They were having an “Everything In The Store is 15% Off” sale that day only.  Timing is everything. 

  3. avatar J Holmes says:

    Yes, shopping is definitely a mind game.  I have to keep reminding myself “Do I really need/want this”.  What I most chuckle about – when I do buy items that are on sale at grocery store and the clerk hands me the receipt with the remark and you saved $$$ today.  Internally  I think No, I spent $$$ today.

    • avatar amw says:

      That is so funny!

      My fiance’ and I were at the store last night, doing our best to save the most money we could on the mound threatening to burst from our cart.

      We went for generic where possible and selected items we had coupons for when we could. Of course signs were up everywhere alerting shoppers to the reduced price on certain brands and goods.

      My fiance’ looked at me and said, “Why do we have to spend money to save money?”

      The answer of course is obvious…but it certainly gave me something to ponder about.

  4. avatar HauntedLady says:

    Some years ago, a friend and I were discussing what things were worth and he made the statement that nothing is inherently worth anything. We assign worth to things and each of us perceives worth a little differently. If you feel that an item is worth $100 or $1000 or whatever, that’s what it’s worth to you. It’s always been helpful to remember that when I see what appears to be a bargain – is it worth it to me? I either avoid spending the money or I get something that I truly need or enjoy. It’s not completely foolproof but does help a lot when I get a case of “I want.”

    • avatar Lila says:

      HauntedLady, yes! Hubby and I have had this discussion on investments, collectibles, real estate etc. No matter the assessed value… it is only worth what someone will pay.

      • avatar D C says:

        Reminds me of my husband buying full sets of baseball cards when our daughter was born.  He was sure that if we kept them perfect and unopened, they’d pay for her college education.  The cost of college jumped quite a bit higher than anyone could have anticipated.  Those baseball cards are up in the top the closet, untouched.  Maybe one of our future grandchildren will put them in the spokes of a bicycle and get some real fun out of them. 

  5. [...] to me more than I’d like to admit. So check out my latest  wowOwow post, in which I explore the psychology of bargains and tell you how to NOT be a sucker for a sale. [...]

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  7. avatar fauwl says:

    The Gap is the worst at this!  I don’t even like the Gap and I find myself buying things because they are “practically free”.   Add in free shipping and the extra airmiles I get for shopping there and it turns out to be quite dangerous.  After looking at my closet one day and seeing all of the outfits I had bought there that I had NEVER worn (nothing fits me there), I decided to opt out of their emails, which has helped immensely.  The best way to avoid falling for these gimmicks is to try and avoid ever even seeing the advertisments to start with.