The story of the dud $1 deal

Last week I spotted a special offer being promoted by a large electrical goods retailer, $1 delivery on small and portable appliances.

Good deal? Well I guess it is better for consumers than their normal delivery (starting at $10-$50) and may generate some business for them. After all, people hate paying for delivery.

But this retailer fell short of making it a door-busting offer by exactly 100 cents. That’s right, had they made delivery free they would have tapped a behaviourally persuasive vein that consumers find it difficult to deny.

Free can change behaviour

As a case in point, look at how The Book Depository offers free international shipping to Australia whereas Amazon charges almost more than the book. I know where my habit now lies (though I just found out Amazon bought Book Depository anyway).

The difference between $0 and charging as little as $0.01 has been well covered in behavioural research. In Predictably Irrational, Dan Ariely recites a study in which preferences for one chocolate over another completely reversed as soon as the least desired chocolate became free.

And noting the persuasive power of free, Chris Anderson wrote a whole book dedicated to it in Free: The Future of Radical Price.

What’s behind the power of free?

So what’s behind the power of free? The absence of risk. The customer has nothing to lose. That’s why so many businesses give away free samples of new products – asking people to pay for something changes the game.

So remember that even if you ask your customer to pay as little as $1 you are asking them to risk losing that money, and you’ve made them think twice about whether they really want to go through with the deal.

While I know that offering free shipping may be beyond the financial reach of many businesses, please, if you are going to discount your shipping down to $1, go all the way, make it free and let it really drive sales for you.

(For more on free delivery see Why Free Delivery Can Beat Off Discount.)

Bri Williams runs People Patterns Pty Ltd, a consultancy specialising in the application of behavioural economics to everyday business issues. Bri is a presenter, consultant and author who you can find out more about at www.peoplepatterns.com.au, viabri@peoplepatterns.com.au or by following on Twitter @peoplepatterns.