Imagine that you are a traveler looking to buy a neck pillow for your overseas flight. The airport shop has a nice selection (even for those who don’t find a monkey quite their style). And they’re only $10 each!  But no — if you only need one, which for most of us is the case, you’ll pay $15.  Will you feel cheated? Probably.

That’s the problem with this kind of “two for” pricing.  Unless you are selling something that most people can use several of, you are likely to have customers buying just one and either feeling bad about their purchase — or assuming that they will get a special price even if they buy just one.

The airport shop has made it very clear that the price for just one neck pillow is $14.99, but often stores just advertise the “twofer” price without realizing that the brain in most cases translates “two for $20” into “$10 each”.  And since the customer knows that this is obviously the value price for buying one, it doesn’t feel good to pay $15.

A better way to handle this kind of promotion, I think, is to use BOGO pricing: buy one, get one at half price (BOGO can also be used for buy one, get one free). The store could have priced the neck pillows at $12.99 and made the second one half price.  This would, of course, result in a slight decrease in income ($2 off on a single sale, 50¢ off on the purchase of two).  But if the item was profitable at $10 each — the income received when two are purchased — then perhaps this would be worth considering.

Airport shops don’t need to worry about customer loyalty, but the rest of us do.  So in addition to finding out whether BOGO pricing would be adequately profitable instead of the Twofer offer, we need to consider whether our customers will feel like a monkey’s uncle if they buy just the one monkey neck pillow they really need for their trip.

Happy retailing,

Carol “Orange” Schroeder

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