Up Yours with “Up To” Discounts

Up your sales revenues from promotional discounts by using “Up to xx% off” formats. Consumers are, by and large, an optimistic lot. If you advertise “Up to 40% off regular prices,” they’ll think the item they’re seeking will be one of those tagged for close to the full discount. You’ll attract almost as many shoppers as you would have if you’d offered the 40% cut on all the merchandise.
     Want to attract even more shoppers? Instead of “Up to 40% off,” use “Up to 39% off.” That’s right. Researchers at Indian Institute of Management find that such “just-below tensile pricing claims” (JBTPC) impress shoppers more than do the corresponding rounded offers. Plus, you could make a little more money for your store by setting the maximum discount at 39% instead of 40%.
     The reason this works has to do with how our brains handle rounded versus precise numbers. Precise numbers lead to us assuming more restricted ranges, so the consumer thinks the variation from the 39% will be smaller than the variation from the 40%. The impression is of a discount closer to the stated number, which translates to a larger discount and increased attractiveness. This is different than with item prices themselves, where 99¢ seems noticeably less than $1.00 to the consumer’s brain.
     The researchers found boundaries to the advantage of JBTPC if offering large discounts or sequential discounts. You won’t attract more shopper interest with “Up to 69% off” than with “Up to 70% off,” nor with “Up to 39% off + additional 10%” than with “Up to 40% off + additional 10%.”
     Other studies indicate more conditions on the use of tensile pricing in general. If you’ve a limited number of products for which you’re offering promotional discounts, tensile pricing will draw more customers than would ads showing the specific discounts on the limited items. But if a comprehensive range of products are on sale, you’re better off stating the actual discounts for a sampling of those products than in using tensile pricing claims.
     Researchers at University of North Texas and Texas Women’s University found that tensile pricing claims are substantially less useful when marketing services than when marketing products. This is probably because with services—compared to the case with products—consumers are more likely to believe that you get what you pay for.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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Advertise Tensile Pricing Selectively
Expect Exceptions to 99-Ending Pricing
Round Up Benefits for the Shopper