How sweet is that deal, really?

Chances are, you’ve probably noticed an abundance of Labor Day ads lately, for everything from discounted patio furniture to back-to-school clothes. Very likely, you even feel like you’ve been hearing about these deals since early August (which, unless you live under an ad-proof rock, you probably have).

Holidays like Labor Day and Thanksgiving are often associated with the big sales that precede them. Advertisers campaign high and low, from grocery store pamphlets to Facebook newsfeeds, and customers come out in throngs to take advantage of the markdowns.

But have you ever wondered: are consumers really getting good deals during these big sale events?

The truth is, probably not.

Be in the Know: Anchor Pricing

When a customer shops for an item, their first impulse is almost always to compare its sale price to its “original,” “suggested,” or “list” price. Buyers are savvy this way. They know deals are out there, and few people are willing to pay full price for something they know they could get at a discount elsewhere.

The problem with this equation isn’t the super savvy shopper looking for a deal, but the misleading “original” price. Often removed from any strict economic basis for a product’s value, the “original,” “suggested,” or “list” price on a label is also known as its anchor price, and that number has almost nothing to do with reality. As Brad Tuttle writes, “anchor prices are set intentionally high, not with the idea that consumers will actually pay the inflated prices, but so that the retailer can create the perception of a tremendous deal when the item is inevitably placed ‘on sale.’”

In other words, the “original” or anchor number on a tag is just a pie-in-the-sky number that makes the consumer feel better about getting a perceived great deal. In reality, the discount price is what the retailer may have been planning to charge all along, and the “original” price is just listed to manipulate customers into thinking the discounts are impressive or too good to pass up.

In recent years, a large number of big name stores have been taken to court in class action lawsuits over this deceptive and unlawful pricing tactic.

To avoid anchor pricing tricks this Labor Day, here are few things to look out for when you hit the stores.

Remember: It’s All Relative

When retailers want consumers to buy a specific item, or a “target product,” they employ pricing strategies for related items that make the target product look more attractive by comparison.

For instance, imagine you’re shopping for a set of pots and pans. One set is priced at $150 and comes with 10 pieces. Another set is priced at $200, but comes with 16 pieces and a coupon for a rebate of $40. Most consumers would look at the options and think “Hey, that second option is a steal,” which is exactly what the retailer intends. The second set of pans is their target product, and they’ll do whatever it takes to make it look attractive to potential buyers.

Be Decisive

Believe it or not, retailers want you to enter their store still uncertain about you’ll buy. It sets them up for a better chance of winning you over, especially if you’re shopping for one of their target products. Ever gone into an ice cream shop and been so overwhelmed by the options that you just went for the flavor of the day? Yeah — that wasn’t an accident.

To avoid getting swept up in target product marketing, aim to go to the store with a game plan (or a list of items) in mind.

Be a Detective

Your deal hunting game can always benefit from some preliminary research. Price check across platforms or scope out the manufacturer’s website. Or, if you plan to shop in stores, go analog. Does the tag or the box have a previous price physically scribbled out, or a new sticker covering where an old one was?

Rather than trust the store-printed shelf label that says “original price” or “marked down from,” look for evidence that the item actually was another price at some point. Chances are, it wasn’t.

Longneck and Thunderfoot offer thought leadership services to turn your company executives’ opinions and insights into authoritative content that starts meaningful sales conversations. Learn more about thought leadership here.