Woolworths copped a pasting on social media this week. But this had nothing to do with its current management woes.

Instead, consumers were poking fun at an absurdly low discount, photographed and emblazoned across the internet.

The ‘Cheap, Cheap Special was reduced from $20 to $19.99 – offering an absurd discount of 1 cent! The advertising would have cost more to produce.

But who is really getting the last laugh?

In a story first published on news.com.au economist Jason Murphy explains some of the tricks big businesses use to improve sales – and this is one.

Psychologists believe that items with a price ending in 9 do sell at a higher volume than those ending in a 0.

This is because we read left to right.

So when we read the 1, in $19.99, the 1 stays in our mind; and is recognisably less than a 2, as in $20.00.

So while the price may be virtually identical the sales volumes are likely to increase.

Another sales trick is the fake discount.

This is best explained by the story of the deaf tailor.

Two brothers, Sid and Harry Drubeck, owned a men’s tailor shop during the 1930s.

Whenever Sid was at the front of the store and a customer expressed interest in a suit, he would ask the customer to speak up (pretending he was deaf).

Image: https://twitter.com/jasemurphy

Image: https://twitter.com/jasemurphy

If the customer asked the price Sid would call to his brother, “Harry, how much for this suit?”

Harry would call back, “For that beautiful, all wool suit, $42.”

Sid would turn to the customer and say, “He says it is 22 dollars.”

And customers would fall over themselves to pay for it and leave.

The original high price infers its quality; while the second lower price makes them believe they’re getting a bargain.

We mightn’t like them, but Woolworths are very good at what they do. Be cautious when you see something that doesn’t make sense.

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