Understanding the Low-ball
I was thinking of buying a good pair of shoes from a long time. However I had never pushed myself for it because my current pair of Nike shoes was still in good condition. Somedays back I was a bit bored and was simply looking into shoes on India’s fashion oriented, app only, E-commerce retailer(You can probably guess which one it was). I liked a pair of Puma sneakers and had bookmarked it. This morning I got reminded of it again and I decided to buy it because a discount of 40% seemed like a good deal.
When I was just about to place the order, I realised that I had to pay an extra tax of Rs. 525 which came as a surprise to me because with most e-commerce companies tax is part of the listed price. However by then I WANTED (craving is a better word?) those sneakers and bought it paying that extra amount. The shoes got delivered in the same afternoon and I was satisfied with it too.
Later in the evening when I was reflecting on this episode, I realised that if the listed price was Rs. 4724(the final amount I paid) I may not have made the purchase or at least not then itself. I felt I was ‘low-balled’. I shall take this opportunity to explain what ‘Low-ball Technique’ (of Psychology of Influence) means so that we are able to identify and dodge it better.
Note: I do not know if this E-Retailer has intentionally designed the system to low-ball the customers (with or without knowing the name) or that it was my mistake not to know how tax worked with this E-Tailer. So I am not confident to say this E-Tailer low-balled me. But I can say I got myself low-balled.
What is Low-ball Technique?
The notes I have taken while doing Coursera’s Social Psychology which was instructed by Scot Plous of Wesleyan University (By far the best learning session I was part of) says
“Once people commit themselves to honouring a request, the request can often be increased without them withdrawing from the commitment.”
Defining it (from Wikipedia) :
“The low-ball is a persuasion and selling technique in which an item is offered at a lower price than is actually intended to be charged, after which price is increased .. “
I am sure many of you have encountered a shopkeeper who revealed ‘hidden’ prices at the later stage. Low-ball technique is also being played out when it is revealed that additional products/services have to be purchased in order for the main product to work properly. An example would be having to buy water softener after buying washing machine (credit of the example to my colleague Durga Prasad). The dealer suggesting additional nice-to-have products after an automobile purchase is also a good example.
Why does Low-ball Technique work?
A) Once we have contemplated buying at the initial price, the initial price becomes an ‘anchor’. The additional ask looks to be only a ‘marginal increase in comparison and thus ‘feels’ to be a logical choice. I have discussed the anchoring effect in detail in a previous article.
B) Since pleasure coming from the thought of the purchase and its future benefits has already begun, backing from it would create psychological inconsistencies which people are motivated to reduce. (Social psychology calls this Cognitive Dissonance — a topic important enough to deserve a separate article for itself in the future). Paying for that additional ask can be thought of as the cost to be paid to prevent the dissonance.
With this knowledge I hope we will be able to better recognise when we are being low-balled the next time. Just recognising the effect and reevaluating our decision at the revised price/conditions can help us come to an overall better decision.
Comments and feedbacks are welcome.
