Economics behind: Up sale!

To all the readers here, I have only one question for you. Have you ever wondered, why you buy more than you intend to? The truth is, you are a victim of something called as up-sale. Simply put, up-sale is where the sellers encourage the consumers to buy more. What happens here is that the consumers are indirectly pressured to buy the better product. This in-turn will lead them to spend more and the producers to earn more.

For a company, it is natural that they think about their growth. Earlier, what used to happen is that companies were focused more on getting new customers. That is why, these companies used to produce only one variety of product for everyone. But, in the recent times, the focus has shifted to divide their products into categories and push the consumers to opt for the better options. This method is not only cost effective, but also, it increases their chances of earning higher revenue and profits. There are substantial costs incurred while acquiring new customers. Some of which are marketing campaigns, sales teams, engineering overhead and commission, all have to be paid for to get customers through the door. But, the existing customers have already been through this. So, if the company pushes a consumer to go for a better offer, what happens here is that all the overhead costs like marketing campaigns become as low as 0. And when this happens, profits go higher and the producers earn more.

Let’s take the example of a movie theater. I am sure most of us like having popcorn while watching a movie. So, what the food company does is that, it categorizes the sizes of the bucket and sells you the biggest one. Even though you know that, you only need the medium size bucket, but most of the time, you would end up with a large bucket. So, why does that happen?

Stat watching from 2:27

You might feel like you are robbed, but don’t blame yourself! You see, we always make rational choices. Human minds are designed to want more. And if we get more than we expect, then we become more satisfied. But, our minds are always in a conflict. We always compare the choices given to us. And this is where the producers take the advantage. Let’s take the example before and consider this: A medium popcorn cost $4 and a large one costs $6. If we see mathematically, 2 medium popcorn will have more popcorn than 1 large one, but it will cost more than 1 large one as well. So, what we will do is immediately switch to spending less if we want more. And, now we end up at 1 large popcorn, which is $6. So, now you are paying more than you initially wanted to which is $6 instead of $4.

So, as consumers, what we need to remind ourselves while buying anything, is the conscience. People are swayed very easily, and that’s why producers gain the most out of this. So while buying anything, one must try and avoid being a victim of up-sale through their conscience. I am sure, if we become more conscious while buying goods for us, we will surely be able to manage expenses and save up if any unforeseen event occurs.

If you enjoyed reading this post, a like would be awesome. Comment below your thoughts on up-sale and let me hear your stories too. If you are new here, do drop a follow. Check out my previous post here. You can now follow me on twitter as well. Stay tuned for more posts by The Antique Economist.

This post is the 1st article of my new series: Economics Behind. This series, I will talk about various day-to-day things we may or may not notice and find an economic connection to it. Hope y’all like it.

42 thoughts on “Economics behind: Up sale!

  1. Fantastic post! When I worked in retail, I was encouraged by my employer to “upsale” the products by encouraging customers to buy the products that are located by the register. It’s a big thing in the sales world and can be successful. But we as consumers, if on a budget, should be mindful of that to avoid overspending.

    Liked by 1 person

  2. Before I became a writer I used to be a salesperson in information technology. I wouldn’t always push the up-sale to the chagrin of my manager. But I did make up for it because my customers respected that and would come back to me with larger deals. They knew that if they brought me larger opportunities I would approach my contacts with the vendor to get special pricing. THAT is where I would offer the up-sell.
    If I was able to get to get them enough of a savings in the beginning, I can then offer them upgraded version, or include the extra part that would allow them to expand.
    “Hey, Bob!” Since I was able to save you $76,000, do you want to look at that $35,000 Microsoft license renewal?”
    I would never make the suggestion spend ALL of the money that they have saved from the first deal, but I knew what other projects that they were working on. I was, in a sense, working with their CTO and IT Director because they often times would tell me what their budgets were for the quarter or the year.

    Liked by 2 people

  3. So interesting! I studied psychology and it was always so intriguing to learn about decision making and how the number of options available also affects what we do. This is really great stuff to know!

    Liked by 1 person

  4. Up selling is much much easier than acquiring new customers. But also as well, making it more frustrating to go to a smaller size can be another trick. You have to remember that employees in theaters and stores want to sell you more. Keep it in mind when you go out and you’ll save much more.

    Liked by 1 person

  5. Spot on! Women seems to be number 1 target. Let’s say you don’t intend to buy shoes but it’s on sale! You thought you saved 30% but you indeed spent 70% from that purchase. Happens to me 😉

    Liked by 1 person

  6. Pingback: Economics Behind: The Korean Wave. | The Antique Economist

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