Try this test (don’t think about it too hard). Which of these offers would you rather have? A free half pint of beer with every pint you buy? Or a pint at half price?
It seems that most people find the offers equally attractive. Maybe they just see the half-pint difference. But of course they’re not equal; if a pint is normally £5, the first offer gives you one and a half pints for £5 (£3.33/pint), the second is the equivalent of £2.50/pint.
If the purchaser is not going to recognise one offer as being better than the other, then as the vendor it’s better to go for the 50% extra free, rather than the 50% off.
Another expression of the same quandary is to ask if you’d rather have a free half pint of beer with every pint you buy? Or a pint at a third off? These really are the same, but the first one somehow seems more attractive. So as a vendor, that’s the one to offer.
Now, our customers are more sophisticated than this, and anyway, we’re not in the sort of markets where we can make these sorts of offers, right?
Well, yes and no.
For example, if our new improved machine has an increased process rate, we could advertise it as finishing the job much more quickly. But we could also say that it’ll process a lot more in the same time.
“Now you can process 100 units in just 40 minutes, instead of an hour”?
Or “Now you can process 150 units in an hour, instead of just 100 units”?
Which would be more appealing in your market? It’s well worth thinking about.