HOW TO NEVER PAY#
FULL PRICE#
THE WRONG PRICE#
SLOP3746 · Week 1
What this course actually is#
Not a bargain-hunting course. Not a list of coupon tricks.
How to Never Pay Full Price is about one question, asked properly: what does a price mean, once you account for discounts, quantity, time, uncertainty and your own constraints?
The semester arc#
Every week moves through the same three stages, on the same running purchase:
- SEE — stop trusting the number printed on the tag
- CALCULATE — work out what a decision actually costs, all rules included
- DECIDE — know when the lowest number is not the better choice
We start in SEE this week, and stay there through Week 3.
Meet your teaching team#
Two people teach this course, split by stage — not because the material is hard, but because each half asks a different kind of attention.
Marisol Quaye — convenor#
Marisol designed How to Never Pay Full Price, including the running $249 headphones scenario this deck keeps returning to. She teaches the odd-numbered weeks — the SEE and DECIDE ends of the semester.
Her one non-negotiable rule for the course: no claim about a real company’s pricing goes in without a source, and no invented number goes in without being clearly labelled invented. You’ll see that rule again on this exact slide deck.
Idris Fenn — tutor#
Idris teaches the even-numbered weeks — the numbers-heavy middle: coupon stacking, dynamic pricing, subscriptions, loyalty points. He also marks Assessment 2, Beat the Shopping Cart.
His standing insistence: every discount rule gets written down clearly before anyone is allowed to call it “obviously a good deal.” He’s reachable by email between sessions if a rule in an assessment scenario is genuinely ambiguous.
How you’ll be assessed#
Three assessments, each tied to one stage of SEE → CALCULATE → DECIDE, adding to exactly 100% of the mark.
The three pieces#
| Assessment | Stage | Weight |
|---|---|---|
| Deal Autopsy | SEE | 20% |
| Beat the Shopping Cart | CALCULATE | 30% |
| Build a Buying Engine | DECIDE | 50% |
The weighting climbs as the work gets harder: reading one promotion is not the same job as building something that can defend a recommendation.
What the marking actually rewards#
Take Deal Autopsy as an example. Its three criteria are weighted, not just listed:
- Identification of claim, reference price and restrictions — 40%
- Calculation of actual effective saving — 30%
- Evidence-based final judgement — 30%
Notice what’s not rewarded: having a strong opinion about whether marketing is misleading. The marks are for the arithmetic and the sourcing.
The one rule behind every slide#
This deck is about to cite real academic sources and real news. It is also going to keep using a hypothetical $200/$100/$249 headphones example that was never actually observed anywhere.
Both are allowed. What’s not allowed is blurring the two together. Every invented number in this course stays labelled as invented; every claim about real research or real company behaviour stays sourced.
Today’s question#
Does a product have one true price?
By the end of this lecture, the honest answer is: no — and that’s not a trick, it’s the whole course.
Five prices, one object#
A single pair of headphones can carry all five at once:
- sticker price — printed on the tag today
- reference price — the higher number the sticker is set against
- sale price — temporary, until a date nobody reads
- market price — what it sells for elsewhere, right now
- willingness to pay — the most you’d hand over, which the tag knows nothing about
This isn’t folk psychology#
Kahneman and Tversky’s prospect theory is the formal version of “five prices, one object”: people don’t evaluate an outcome in isolation, they evaluate it as a gain or loss relative to a reference point — and the value function is steeper for losses than for equivalent gains.
Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291.
A sticker price is exactly a reference point. Move it, and you move how every other number on the tag feels.
None of these is fake. They are five different measurements of the same object — and a retailer chooses which one to print in large type.
Thaler’s mental accounting#
Richard Thaler’s mental accounting work explains why the printed reference number changes how a purchase feels, not just how it’s calculated: buyers track a “transaction utility” — the perceived quality of the deal itself — separately from the plain value of the good.
Thaler, R. (1985). Mental Accounting and Consumer Choice. Marketing Science, 4(3), 199–214.
A $100 item marked down from $200 carries positive transaction utility a plain $100 item never gets — even though the buyer ends up in the same place.
Which is the better price?#
A — was $200, now $100 — 50% OFF
B — $95, no discount shown
(Hypothetical figures, chosen only to make the comparison clean.)
B is cheaper.#
$95 < $100.
The 50% badge measures the gap to a reference price — a number the retailer chose. It says nothing about A versus B.
Anchoring, in the literature#
The “was $200” figure is doing exactly what Tversky and Kahneman described as the anchoring heuristic: an initial reference value pulls a final judgement toward itself, even when the anchor is arbitrary or the person knows it’s arbitrary.
Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124–1131.
The badge is the anchor being handed to you in large type.
The decoy effect#
William Poundstone’s Priceless retells a Duke University experiment on beer pricing: given a choice between a $1.80 budget beer and a $2.60 premium beer, buyers split roughly evenly. Add a third, dominated option at $1.60 — worse on every dimension than the $1.80 beer — and almost everyone abandons the cheapest choice and buys the $2.60 premium beer instead.
Poundstone, W. (2010). Priceless: The Myth of Fair Value (and How to Take Advantage of It). Hill and Wang.
The $1.60 decoy was never meant to sell. It exists to make $1.80 look like the budget trap and $2.60 look reasonable by comparison.
Why the decoy works#
Simonson and Tversky formalised this as extremeness aversion: in a set of three or more options, the middle option gains attractiveness simply for being in the middle, independent of its own merits.
Simonson, I., & Tversky, A. (1992). Choice in Context: Tradeoff Contrast and Extremeness Aversion. Journal of Marketing Research, 29(3), 281–295.
Add a deliberately bad third tier to a two-option menu, and the middle option — which didn’t exist as “the middle” a moment ago — starts to look chosen by you, not steered.
Charm pricing isn’t superstition either#
Retailers don’t set $199.99 by habit. Thomas and Morwitz found a measurable left-digit effect: shoppers anchor on the leftmost digit of a price, so $199.99 gets processed as closer to “$100-something” than to $200, even though the true gap is one cent.
Thomas, M., & Morwitz, V. (2005). Penny Wise and Pound Foolish: The Left-Digit Effect in Price Cognition. Journal of Consumer Research, 32(1), 54–64.
The effect is strongest exactly where the leftmost digit changes — $2.99 versus $3.00 — which is precisely where retailers put the line.
The main lesson#
The number you compute is only as good as the thing you’re computing it relative to.
This idea comes back in a different form every week.
This week’s psychology sources#
- Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291.
- Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124–1131.
- Thaler, R. (1985). Mental Accounting and Consumer Choice. Marketing Science, 4(3), 199–214.
This week’s pricing-tactics sources#
- Simonson, I., & Tversky, A. (1992). Choice in Context: Tradeoff Contrast and Extremeness Aversion. Journal of Marketing Research, 29(3), 281–295.
- Thomas, M., & Morwitz, V. (2005). Penny Wise and Pound Foolish: The Left-Digit Effect in Price Cognition. Journal of Consumer Research, 32(1), 54–64.
- Poundstone, W. (2010). Priceless: The Myth of Fair Value (and How to Take Advantage of It). Hill and Wang.
This semester: one purchase#
A pair of headphones. $249. Today, that’s all we know.
Every week adds one more piece of information that changes how “$249” should be read.
Why one purchase, not ten#
A pile of unrelated examples would let you forget the last lesson before the next one lands. One purchase, tracked for twelve weeks, means every new concept has to sit next to everything you already know about that same $249 — anchoring, unit price, discount stacking, and eventually sunk cost, all attached to the same object.
Before Week 2#
- Read the Week 1 page and try the price-challenge widget on the homepage if you haven’t already
- Bring a product you’ve bought recently where the pack size felt like part of the decision — Week 2 is unit price
Before Week 2, continued#
If a rule in next week’s examples looks ambiguous, that’s worth raising early rather than guessing. Idris marks the numbers-heavy weeks and is reachable by email between sessions; Marisol holds office hours for anything about the course design itself, including this deck’s sources.