Ten Percent is Not Ten Percent

Ten percent does not equal ten percent. Let’s look at two marketing offers:

10% Off a Purchase of $100

In this scenario, a person will purchase $100 worth of goods. When it comes time to pay, the 10 percent discount will be applied and the person will pay $90.

10% Bonus on a Purchase of $100

In this scenario, a person will also purchase $100 worth of goods. They will pay $100 and then get a $10 bonus to use at another time. 

Mental Accounting

In the second scenario, the store was able to charge the regular price of $100. Additionally, that $10 coupon will be viewed as free money and spent differently that $10 normally would. Someone may purchase something they wouldn’t normally purchase because it feels like it’s free. The way we frame things matter.

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