Lets watch it and discuss.
Do you fall into the category?
That guy's surely making a lot of hand movements. Just saying.
I don't think you'd get an answer that correctly represents that phenomena from here. Ozbargain community revolves around the concept of saving, even if people do not end up caring too much about $5 discount on a purchase larger than $10, you'd expect those who care about them to be in Ozbargain more than in general population.
So if it is a $10 item and I will save $5, I am personally more inclined to buy more than one. So my savings would be multiple amounts of $5.
Also, when negotiating on bigger items, every $ counts to me. When recently purchasing new carpet I was down the lowest price I could get anywhere (not advertised price, negotiated price) on a comparable material /colour/etc that was acceptable to me. I negotiated further to get a $5 barbie doll for my daughter. Told him I wouldn't get the carpet without it, and I was completely serious. I got the carpet, daughter got the doll, he got his sale.
I think it's more related to the percentage. If I am saving $5 on $10, actually I am saving 50% but if I am saving $5 in $1000 I am saving 0.5%
Can you give us a text summary? I'd like to save 10 minutes.
People respond to proportion rather than absolute value when it comes to saving. They, in general, care less about $5 off on $200 than on $10 purchase.
Thanks. That's correct. Another reason might be that the $10 is a frequent purchase while the $200 is a once in a blue moon purchase.
That's possible, since people tend to care less about the products that they infrequently. Though, I think it sort of makes sense even if you compare the two products that you rarely buy with different prices. If you consider getting a fountain pen (which lasts fair bit of time if you take care of it) that costs $20~30, you'd be more responsive to $5 discount than for something like $500 phone (the examples are awful, but I think they make sense, sort of). Of course, how people respond would probably be determined by many other things. So usually, when these things are researched, they hold everything else constant in their model or do other statistical witchery.
@AznMitch: Well the nice thing about human behaviour is that it's very easy to test so there's no need for models as such to create predictions.
@Diji1: If you are being sarcastic, I have to say that it's fairly used (if not the most) method to explain human behaviours (It's a scientific method, it's used everywhere). You find factors that correlate to the behaviour, create a model and to explain the effect of a factor on something, you use statistics. What you are doing is you set everything else constant in the model when you find the effect of a factor. Economists and psychologists know the limits of their models, that's why we don't have a singular model that emcompasses everything.
i think of savings in terms of an hourly wage.
If I can save $5 and it takes me 5 minutes then I'm earning the equivalent of $60 per hour - worth the effort.
but saving $5 for one hour of work is therefore $5 per hour and not worth it.
Yeah but that's relative to one's hourly rate.
People might be interested in this book: http://www.amazon.com/Priceless-Myth-Fair-Value-Advantage/dp...
It might surprise you how exceptionally malleable your sense of value is although along with everyone else you will have no awareness at all that you have been manipulated. As a few posters have already commented we are effected by contrast (or proportion as they put it) much more than absolute values - this is basically the practical outcome of that tendency of humans when it's applied in price setting.
This seems counter-intuitive to how we experience the world but everyone acts with a large amount of irrationality whilst experiencing the world as rational. Especially counter-intuitive is that knowing about the manipulation does not make you immune either - and you will continue to experience the "compensating" you do as rational while still acting irrationally to anyone who tests you as part of a group in tests against controls.
I went to a local garden nursery a month ago. I bought 5 plants & when I got to the checkout the cashier asked me did I want to join their rewards program as I would get $5 off my next purchase. I thought about it for a few seconds thinking I may be back sometime in the future so it may be handy as I didn't realise plants were somewhat expensive these days. I was then advised it was $5 to join their rewards program which I then quickly declined. Spend $5 to maybe save $5 in the future just didn't seem worthwhile to me.
Supercheap auto deal is $5 for membership, and you get $10 credit. I like that