If you’ve been trying to find Cheap School Supplies or discount stationery in the area, then by now you’re probably feeling like you’ve stumbled onto the set of Carry On At The Circus. It’s difficult to get a read on what’s the right price to fund pens, paper, ink or biscuits – particularly when you’re ordering in bulk. Whomever your supplier is, you’re likely to achieve massive savings over high-street prices.
On the other hand, you can still wind up paying two to three times over the odds. A discount promotion or buy-one-get-one-free offer is actually a warning signal, and more than likely forms part of a pricing strategy that will look at you paying more for stationery and office supplies.
If you’re an economic director or office administrator, you might already be clued in the big secret – but for the rest of us, here’s the one secret that’s going to wipe off just as much as half your office supplies expenses in a single swift movement:
Stop looking for discounted office supplies
It’s not just a call to arms over quality control – for some situations, it might be appropriate to get your budget option instead of the high-end one. Nor is it about wastage and logistical planning, although proper cost analysis is a crucial element of controlling your office budget. Rather, it’s a question of Bayesian signalling; Gricean logic; and, ultimately, fundamental principles of pricing. Although there are complicated concepts at work, it boils down to simple human nature.
We’re hard-wired to visit following the option with the big shiny ‘discount’ sticker on the front – even when it’s higher priced. It’s a bizarre little quirk from the human brain, then one that’s hard to turn off – as US retailer JC Penney discovered with their ongoing regret.
Back in 2012, the supermarket giant announced they were putting an end for their promotional pricing strategy, which saw everyday staples with a permanent discount. Like the majority of supermarkets, JC Penney was artificially inflating their shelf prices before giving them an arbitrary discount. Sometimes, a 50% discount was actually a 10% increase on the recommended list price.
The incoming CEO Ron Johnson announced a shift to a different, ‘honest’ system of pricing without any fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or any other shifty tactics. The brand new system was intended not just to less expensive costs, but to aid consumers make informed decisions regarding their groceries and budgets. The fact that Honourable Ron became Jobless Johnson within less than a year probably tells you how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with a feeling of anger over the things they perceived as a betrayal; revenue and share price went into freefall; as well as the company quickly returned with their previous technique of artificial markdowns. When offered exactly the same products having a lower pricetag, customers still preferred to pay for the higher price – so long as it had a discount sticker onto it.
In fact, JC Penney customers were so offended through the disastrous strategy that brand loyalty not merely went down, with perceived trustworthiness falling as prices decreased; but stayed down too. The sgzvks actually issued an apology to jilted shoppers, however the client base stayed away until prices were raised – in some cases higher than they originally were. A niche commentator had this to state:
“The bargain-hunting website dealnews has since commenced tracking prices at JC Penney. Exactly what it has discovered is that the prices of certain items-designer furniture, specifically-have risen by 60% or even more at JC Penney almost overnight. One week, a side table was listed at $150; a couple of days later, the “everyday” price for the very same item was up to $245.”
Discount pricing strategies are virtually par for the course on the high-street – and, as the BBC uncovered, most of them are as arbitrary and misleading as JC Penney’s. And, in most cases, they make sense coming from a B2C perspective. The Chartered Institute of advertising claims that attention spans are restricted to 8 seconds, rather than the 12 seconds that they were in early 2000s.
We are now living in the details age: a realm of multitasking; 140 characters; ‘top 10 everything’; truncation and enumeration and fast food; where consumers have to make decisions quickly based upon limited information. Discounting is an immediate recognisable signal which a wise purchasing decision is being made, (whether true or otherwise not).
For someone associated with B2B procurement, however, discount pricing needs to be public enemy number one. Unfortunately, every workplace from the local chip shop to the state of New York City has at one time or any other fallen victim towards the same ruses that operate in the supermarket.
Promotional pricing strategies in the office. It’s often said disparagingly of politicians which they don’t know the buying price of a pint of milk, (or when it comes to the mayor of the latest York, the buying price of a pen and paper). In every honesty, however, none people do.
Milk, bread, and other staples are typically far cheaper than they ought to be – for any number of reasons:
They might be used as a loss leader, to draw in customers who’ll then pay more for other considerations.
They might be inferior-quality versions used to undercut competitors.
They might be bundled with other items as part of an up-sell; sandwich-drink-and-snack deals at lunchtime are a great example, but there are invisible examples like coffee strainers and coffee (or printer and printers).
They might be employed to build trust or complacency inside the shopper, who will often judge all the prices of a retailer based on the first or most common things that they buy from them.
They can use secrets to human perception – including charm pricing (like.9 or.7); pricing under benchmarks (such as £1, £5, £10 and so on); or perhaps just including information that looks relevant but isn’t. A thing that is advertised as “Only £1.99 whenever you buy 2!” may look like a price reduction, however if the single unit costs £0.99 then it’s actually more costly.
All of the tricks outlined above, utilized for milk and bread, apply equally well to equivalent office basics like pens and paper. You are able to verify that for yourself with only a few minutes of searching – or checking your most current receipt.
In day-to-day life there’s not a whole lot we are able to do about this sort of obfuscation. Only a few people have the time, resources or inclination to analyze and compare grocery prices on an item-by-item level – as well as the opportunity costs of rushing from supermarket to supermarket in the quest for the cheapest potatoes by gross weight in fact probably outweigh the advantages. That’s why JC Penney’s consumers are slowly returning because the charges are rising.
A business facing similar purchasing options, however, has the benefit of an economic director to protect its decision-making process.
There’s still scope, even or possibly especially in age of information, to have someone on staff that can perform considered, researched procurement. Somebody who can spend some time to do a proper cost analysis; engage in slow thinking; and are available to a conclusion based on facts as opposed to on sound and fury.
While honesty didn’t figure out very well for Ron Johnson, we at CP Office still feel that it’s both worthwhile and worth a go. So, unlike various other stationers and vendors of Buying In Bulk, we prefer to offer an impartial cost analysis to the potential customers, as well as the benefit of our genuinely competitive prices. With CP Office, there’s no fuss without any tricks – just an honest discussion about what’s most effective for you as well as your office.