The Free Offer: "As with heavy traffic, when you see 'free,' slow down and be cautious," Ariely suggests. A common example is the promise of free shipping. Very often that's built into the price of the product, or it's contingent on your spending over a certain amount. "The appeal of zero cost is tied to the fear of losing something—mostly money in this case, but also making a poor decision," he explains. "There appears to be no possibility of loss when we choose something free, but, of course, the risk is usually just not visible."
Context Inflation: "If you've been given an estimate of $40,000 to renovate your home," Ariely says, "adding a $4,000 fireplace may not seem like much of a stretch, until you think about other things it could buy—as in, $4,000 could pay for a vacation or new computers for the family." The dollar figure alone may not register.
The Decoy: A coffee chain might offer three cup sizes: a 12-ounce at $1.77, 16 ounces at $1.98, and 20 ounces at $2.09. Even though the company could profit nicely by selling the largest cup at 75 cents, because of the two smaller decoys we feel that $2.09 is a bargain and happily pay it. "When you see a range of prices, it's as if you were coming from a dimly lit room into a bright one; at first you're not used to the light, but you quickly adjust. We don't think about how much money is worth to us; we just make a relative decision."
Too Many Choices: Ariely's research shows that we like to keep our options open (the "fear of loss" thing again)—so we'll buy the high-tech (high-priced) camera with functions we never end up using. If you're deciding on an item that comes in many models, Ariely suggests giving yourself a time limit: "When you're down to the final two options, toss a coin, and while it's in midair, try to feel how you want it to fall—that's your answer."
*Source: Blackfriars Communications, a marketing consultancy firm in Maynard, Massachusetts.
