4 Pricing Strategies Restaurants Use To Make You Spend More Money
The simple retail marketing tactics that make us empty our wallets when we eat
We get ripped off every day. We like to think that we don’t — but we do. One place that we often spend more money than intended is restaurants. The way they design the pricing is to distract you, make you let down your guard, and get you to overpay.
I’ve worked in restaurants all over the world, so I’ve seen all of this firsthand. There is also some psychology behind why things are priced the way they are.
These marketing and pricing concepts exist throughout retail, but let’s look at what you can do to make that end of meal check as low as possible. Here are four standard things restaurants do to make you spend more money.
1. Taking Out Any Mention of “Dollars”
When we see a currency sign, it can get us worked up. A dollar sign looks like a bill, and even reading the word dollars makes you very aware of the cash you are about to spend.
A simple way that restaurants take away the fear of spending too much money is by removing any mention of dollars.
By taking away the dollar sign ($), it changes the way we perceive the value. $18 will always look easier to dismiss than just 18. Quality restaurants will not use the word dollars, won’t use a dollar sign, and just keep a simple number as the price. In your eyes, the number — without the excess of the dollar sign, or .00 behind it — will look smaller.
Those menus that just put a number next to the dish may look like they are fancy and streamlined, but in reality — it’s helping get your guard down.
Taking out commas is a good way to do this, too. This applies more in the retail world, but $1,499 will always look bigger than $1499.
Even just using a number with fewer syllables helps to make something seem cheaper.
According to research, whether you say a price out loud, or just read it, your brain sees fewer syllables as cheaper. The Journal of Consumer Psychology found a positive relationship between syllabic length and perceived magnitude. Even if two prices have the same written length, the phonetically longer price appears to be higher in magnitude.
If you read $27.82 and $28.16 in your head, the first one probably seems larger. It has seven syllables, while the second price has only five.
2. Using the “Decoy Effect”
Many retailers use the decoy effect, but in restaurants, it’s a simple way to sell you more expensive wine. The decoy effect is about creating the perception of value.
Wine menu prices are ordered to make you think you’re getting a good deal — but you are probably overpaying and spending more than you planned.
The decoy effect goes like this: If there are two bottles of wines on a menu for $9 and $16, which one would you pick? It’s not that definite. If you’re cheap like me, you may go for the $9 one — but there’s not much of a scale of reference.
If this list now has a $47 bottle on it, most of the time people will go for the $16 one. The perceived value of the $16 bottle has changed. Something you may not have bought because the price seemed too high now suddenly appears of value — and less expensive.
You can see how adding in the red $50 decoy bottle changes the perceived value.
Wine lists will always have a few high-end and very expensive wines on them. These are the decoys to make other wines appear cheaper (which might not have looked as cheap if the expensive ones weren’t on the list).
Movie theaters are notorious for this with their popcorn and drink prices. For example, popcorn usually comes in small, medium, and large sizes. If we use some arbitrary numbers, they will price the small at $3, the medium at $6.50, and the large at $7.
You will almost certainly take the large as we perceive it as the best value. The medium is only there to serve as a decoy to push you to the more expensive purchase.
Your best bet to not get caught up in all the wine pricing is to have some favorites to look for. Cover up the prices and scan the list instead of getting sucked in on the price.
Bonus wine tip
This is partially related to the decoy effect, but more based on individual glasses. If there is a $6, an $8, and a $10 glass of wine, most people don’t want to look like a cheapskate and they go for the second cheapest.
In a lot of places, their goal is to make you buy that one. The second cheapest is usually the least in value. It also may be a lower-end wine with a huge markup.
Retail and restaurants bank on your pridefulness in making these decisions. With restaurant wine, you were probably better off — value-wise — going for the cheapest one, as they aren’t often marked up that much.
3. The Left Digit Effect
This is another simple marketing and pricing decoy that has been used in pretty much every store you’ve ever gone to. The most famous example of this is the .99 added on to most prices.
Since we read left to right, the first number we see will make us think the price is lower. $2.99 compared to $3.00 will always appear to be cheaper as we see that 2, first.
Restaurants will always price out their items, then knock a few dollars off to help employ the left digit effect.
If a steak is priced out to sell for $41, dropping it to $39 will always be a better move to get the smallest possible number in that first left position.
4. The Importance of Font Size
This relates to taking the dollar sign out of the price and making a number look as small as possible.
The Journal of Consumer Psychology notes that the fewer characters in a price, the smaller it looks. To make the price of something appear even less than it is, you want to use a smaller font.
This works really well on those items priced with 99 cents on the end. If you have an item priced at $12.99, putting the .99 in a smaller font — and higher up — creates the illusion of being more minimal compared to all the numbers being the same size.
We’re all aware of the various pricing strategies that we face in the retail world — but some are more hidden than we realize. With restaurants, many follow a similar formula, so all the pricing techniques now seem second nature to us.
By making yourself aware of the different pricing and marketing strategies, it can help save you from spending more money than necessary.
And if you’re in a restaurant reading a menu that has pictures of food on it — run, and don’t look back. That’s the number one red flag that you’re not going to have the greatest meal of your life.