Best price = 33% off or 33% more?

[no1_vern]

I have two deals for you:

The first deal takes 33% off my regular price.

The second offers 33% MORE product.

Which is the better deal?

If you want to buy my product, and get the best deal, which would YOU choose?

I dont wanna play with your poll. Give me the answer now!

[tony_j15]

Baseline: If price = $1 and quantity = 16oz, then costs = .0625 per oz.

If price = $1 by 33%, then new price = .66 and quantity = 16oz, then costs = .04125 per oz.

If price = $1 and new quantity = 21.28 oz, then costs = .0469 per oz.

The first deal is better. Assuming I did my math right.

[Theophylact]

You don't need to do any calculation. Just take an extreme situation: 100% more product for the same price means you're paying half as much per unit; 100% off the price means you're getting it for free.

[The Real Bingo]

It depends on your marginal utility gained from the last unit of the product in each instance. If your marginal utility is still greater than marginal cost of the last unit of the 33% more situation, then that's the better deal. Each person's marginal utility and opportunity costs vary between goods/services, so it is impossible to say.

[no1_vern]

Yes, choosing the discount is correct.

The deals appear to be equivalent, but in fact, a 33% discount is the same as a 50 percent increase in quantity. Math time: Let's say the standard coffee is $1 for 3 quarts ($0.33 per quart). The first deal gets you 4 quarts for $1 ($0.25 per quart) and the second gets you 3 quarts for 66 cents ($.22 per quart).

The upshot: Getting something extra "for free" feels better than getting the same for less. The applications of this simple fact are huge. Selling cereal? Don't talk up the discount. Talk how much bigger the box is! Selling a car? Skip the MPG conversion. Talk about all the extra miles.

If you have seen any of the TV commercials lately, you have heard about how the trucks are able to travel so many miles per tankful.

Also mentioned:

(3) We're terrified of extremes.

People were offered 2 kinds of beer: premium beer for $2.50 and bargain beer for $1.80. Around 80% chose the more expensive beer. Now a third beer was introduced, a super bargain beer for $1.60 in addition to the previous two. Now 80% bought the $1.80 beer and the rest $2.50 beer. Nobody bought the cheapest option.

Third time around, they removed the $1.60 beer and replaced with a super premium $3.40 beer. Most people chose the $2.50 beer, a small number $1.80 beer and around 10% opted for the most expensive $3.40 beer.

More here - Business - Derek Thompson - The 11 Ways That Consumers Are Hopeless at Math - The Atlantic

[The Real Bingo]

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