The main claim of the article is

*"Shoppers prefer getting something extra free to getting something cheaper."*

which they "explain" with

*"Most people are useless at fractions."*

For example people don't realize that a 50% increase in quantity is the same as a 33% discount in price.

50% increase in quantity = 150% = 1.5For those who still don't get it, we can also look at it the other way around:

33% discount = 67% = 0.67

1 / 1.5 = 0.67 and thus 1 / 0.67 = 1.5

a 33% discount on something that is 150% results in 100%

150% * (1-0.33) = 100%and a 50% increase on something that is 67% also results in 100%

67% * (1+0.50) = 100%

Therefore if you're offered either a 33% extra for free or a 33% discount you should definitely go for the discount, since we already learned above, the 33% discount gives you a 50% extra for free.

Another marketing trick people often fall for is double discounting. So if a product has been reduced by 20% and then later on by another 25% percent, most people think 20% + 25% = 45% discount, while the truth is, it's only a 40% discount.

100% * (1-0.20) * (1-0.25) = 60% which is obviously a 40% discount

*Note: values have been rounded to make them easier readable. If you perform the calculations yourself and you want precise results, use fractions instead of percentages, e.g. 1/3 instead of 33%.*

## No comments:

## Post a Comment