Not-so-good deals

I’ve seen a few “spend more, save more” deals that appear to give you a higher discount for larger purchases, but really don’t when you do the math. I suppose businesses have these promotions because they’re counting on customers only comparing the numbers, and not comparing percentages. Granted, they might not be able to offer a greater discount, but I have seen other “spend more, save more” deals where the discount does increase with the spending.

Here are some real examples that I’ve come across:

$7 off order of $50 or more, OR $15 off order of $125 or more.
I guess they want you to think 15 is greater than 7, so I’ll spend $125 (or more)! If we do the math, we’ll see that 7 is 14% of 50, and 15 is 12% of 125. It actually is “spend more, save less!” Also, those percentages are the highest they’ll ever be, so your discount will be the highest if you spend exactly $50.00. With a fixed dollar amount discount, the percent of discount goes down as you spend more. By the time you’ve reached $58.33, you’re getting a 12% discount. If you hit $124.99, a $7 discount is only 5.6%, and it’ll make sense to spend a little more to get $15 off.

Here’s an interesting one: 15% off your purchase of $400 or less, OR $60 off your purchase of $400 or more.
If you spend exactly $400, you’ll be saving $60 either way, because 15% of 400 is 60. Anything beyond $400 means your discount is less than 15%. They might as well have said “get 15% off on orders up to $400,” but then who would want to spend more than $400? I wonder if anyone actually thought $60 off looks like a better discount than 15% off, because 60 is larger than 15.

Save $5 on orders of $25 or more, OR save 15% on orders of $45 or more.
You can look at this one in several ways. You might first think 15% of 45 is 6.75 (that’s the smallest discount for this option), which is greater than 5. (Keep in mind, you’ll have to spend at least $20 more to get this discount.) However, 5 is 20% of 25. Keep in mind that with the fixed dollar discount, the percent of discount goes down the more you spend. When you get up to $33.33, a $5 discount is a 15% discount. You might as well aim for $45 at that point, because by the time you reach $44.99, the $5 discount is only about 11%. Personally, I would try to keep my total as close to $25 as possible, since it’s hard for me to find stuff to buy. (Gone are my days of just buying beads because they’re pretty. Now I prefer to not buy beads unless I already have a specific project for them.) Of course, if you want to buy more, the second offer would suit your needs better.

*      *      *

While we are on the topic of percent discounts, here’s another scenario that often throws people off. “Take an additional 10% off your entire purchase, including sale items.” If an item is already marked down by 60% what is the total percent discount? It might be tempting to simply add the two, and conclude that you’re getting it at 70% off, but that’s not the right answer!

To make the numbers easier to work with, I’ll set the original price of the item at $100. Sixty percent off that would mean a $60 discount.
      $100 × 0.60 = $60
At this point, you’ll still have to pay $40.
      $100 − $60 = $40
An additional 10% off the $40 is $4. This is the part that causes confusion for many people. The additional discount is applied to what is left after the first discount, not to the original price.
      $40 × 0.10 = $4
The total discount would be $60 + $4 = $64, which is 64% of 100. Therefore, when you get a 10% discount on top of a 60% discount, you’re actually getting 64% off, which is still not bad. (The 64% holds true regardless of what the starting price is. If you don’t believe me, try the above calculations with a different starting price.)

I’ll leave you with this question, just to think about: Would you rather get an additional 20% off an item that’s marked 50% off, or an additional 10% off something that’s already 60% off? They’re both pretty good deals in my opinion, but the take-home message is neither of them are 70% off.

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