Syncsort’s just-announced intent to buy of Pitney Bowes Software solutions business, following its SQData acquisition, are aimed at bulking up mainframe connectivity and addressing gaps in data enrichment.
In commerce, a single phrase wields the power of a thousand salespeople.
It can turn even the most rational consumers into crazed lunatics who stand in 3-hour-long lines to save $3 and punch each other in the face over pieces of cheesecake.
We’re talking, of course, about ‘buy one, get one free.’
Deep down, most of us understand that nothing is truly free. Corporations don’t offer us deals out the goodness of their hearts — they do it because it’s great for business. Sometimes, these promotions can even be flat out deceptive.
So why does the allure of ‘free’ hold us captive? And are these deals even worth it?
The hypnotic power of ‘free’
Let’s imagine you’re hankering for a treat and you are offered a choice: A Hershey’s Kiss for $0.01, or a much higher-quality Lindt truffle for $0.15. Which would you go with?
In his book Predictably Irrational, behavioral economist Dan Ariely ran this exact experiment and found that 73% of folks chose the pricier Lindt. But when he changed the price of the Hershey’s Kiss from $0.01 to free, 69% opted for the Kiss.
The introduction of that one word — free — entirely reversed the outcome of the study.
When a ‘free’ option is introduced, it completely changes our decision-making process; example via Dan Ariely (visual: Zachary Crockett / The Hustle)
When confronted with a purchasing choice, we typically run a quick internal cost-benefit analysis, weighing potential satisfaction/joy against price.
But Ariely concluded that when the word ‘free’ is introduced, it not only decreases the cost but makes us believe the benefits of the free item are higher. Suddenly, that mediocre Hershey’s Kiss is the finest chocolate known to mankind.
As a result, we fall victim to the zero price effect, a phenomenon whereby our demand for an item dramatically increases when it is free.
For example, most of us would never purchase a low-quality, ill-fitting t-shirt at a store for $15. But when that same t-shirt is free, launched from a cannon at the ballpark, we’re willing to break bones and spill $12 beers to get our grubby hands on it.
“The moment something involves ‘free,’ we get overly excited,” explains Ariely, “and we no longer think rationally.”
Retailers are well aware of this — and for more than a century, they’ve taken advantage of our lunacy by enlisting a promotion known as the BOGO.
We’ve all seen it flashing across TV screens, splayed across e-commerce landing pages, and pinned to sweaters at clothing stores: BUY ONE, GET ONE FREE!
While the origins of this infamous promotion are unclear, The Hustle traced it back to newspaper clippings from as far back as 1908.
Buy one, get one free ads in the Barder County Index, Kansas (1908)
Largely marketed toward women, these early ads offered 2-for-1 wool dresses. In these early days of price opacity, the first dress would be marked up to cover the cost of both.
Today, these offers, affectionately called ‘BOGO’ by the corporations that peddle them, make up an estimated 80% of all ‘free’ promotions. A whopping 93% of all shoppers have used a BOGO — and 66% of them say it’s their favorite type of discount.
For retailers, BOGO deals are extremely effective: They allow for the profitable liquidation of low-quality inventory under the guise of “doing something nice” for loyal consumers.
Let’s say a retailer has a surplus of jeans that cost them $20 per pair and carry a “suggested retail price” of $100 (they never actually sell at this price). If they run a standard 50%-off sale, they make a $30 profit ($50 – $20). With a BOGO, they offload two products instead of one and walk away with the same profit per pair.
A buy one, get one free is a glorified 50% sale (visual: Zachary Crockett / The Hustle)
Shoppers like these deals because, on paper, they seem to offer a second product totally free, at no extra cost. But according to an industry insider, the goods we typically get in a BOGO deal are “low-demand, non-efficient, lacking in quality and/or close to the expiration date.”
“The BOGO is one of these quasi-legitimate — maybe not-so-legitimate — deals that rely on consumers not paying a lot of attention to what they’re doing,” Mark Cohen, Director of Retail Studies at Columbia University’s School of Business, tells me.
“Buyers see ‘free’ and find it to be incredibly compelling without really doing the math.”
The math is simple: What you’re really getting with a BOGO deal is a 50% discount off of the manufacturer’s suggested retail price (MSRP). And oftentimes, this price is artificially marked up to begin with.
Why ‘free’ deals usually aren’t as good as they seem
Bonnie Patton is the Executive Director of Truth In Advertising, a nonprofit that aims to regulate deceptive advertising and false marketing. On a daily basis, she receives a “barrage of alerts” from the public on shady ‘buy one, get one free’ promotions.
Patton tells me there are several reasons BOGOs often aren’t as good as they seem:
Visual: Zachary Crockett / The Hustle
A common tactic with shady BOGO deals is that the retailer will simply make the first item more expensive. You might, for instance, see a deal where you buy one shirt for $40 and get one free — but it’s possible that the true price of the shirt is $20, and you’re merely buying 2 at list price.
According to Consumer Reports, there have been at least 150 lawsuits against more than 80 retailers over misleading ‘free’ promotions in the past few years. Some of the more notable BOGO examples (links to court cases below): \* Burger King offered a BOGO Croissan’wich deal but charged a higher price ($3.15) for the sandwich than it regularly cost ($2.16). \* MyPillow offered BOGO deal on their pillows, but really just doubled the price of the first pillow. \* VIsionWorks offered a BOGO on eyeglasses, but it turned out they’d increased the price of the first pair by ~40%. \* Jos. A. Bank offered BOGO deals on clothing but inflated the cost of the original item (i.e. a suit that would typically sell for $600 was sold, as a part of the “deal,” for $800). Claims from a 2017 lawsuit against MyPillow (via Truth in Advertising)
“Retailers are often as guilty as you can get with manipulating price of an item,” says Cohen. “You’re often charged a price that nobody has ever paid; anything that’s free is just carved off the regular price.”
Another misconception with buy one, get one free deals is that your total utility (satisfaction or happiness) is higher since you paid less for two items than you would’ve at list price.
This makes sense if the item is something you know you’ll eventually use (like toothpaste), but BOGO deals are more typically applied to goods like expirable food, or clothing.
But we often forget about a little something called the law of diminishing marginal utility.
Simply put, this law states that the utility we get from an item decreases with each subsequent item.
If we get a 2-for-1 pizza deal, for instance, the first slice is going to give us tremendous joy. The second slice, a little less. By the time we get to the second pizza, we’re bloated and the benefits of eating it have dramatically declined.
Visual: Zachary Crockett / The Hustle
Studies have shown that consumers will buy two of something when the word ‘free’ is involved, even when they only need one — and the second item often ends up in the trash. If we walk into a store intending to buy one carton of milk, but encounter a BOGO deal and buy 2 cartons, we’ll almost invariably waste that second carton.
So unless you encounter a BOGO deal on something you already planned on buying 2 of (and have an actionable use for), it’s generally not worth it.
Too good to be true
Of course, the BOGO deal isn’t the only ‘free’ promotion retailers use to amp up our consumption.
Most online clothing brands offer ‘free’ shipping, with the catch that you have to meet a minimum purchase amount (often $100) to qualify. Some 58% of consumers will add additional items to their cart — often things they didn’t originally intend to purchase — just to “save” $5 to $10 on handling fees.
On platforms like Amazon, free shipping is often factored into the price of the item: A coffee mug that usually sells for $10 + $3 S&H will go for $13, with FREE shipping. We’re far more likely to buy the mug with the latter pricing model, even though we’re paying the exact same amount for it.
Visual: Zachary Crockett / The Hustle
Another common tactic is giving an item (say, a book) away for free, but burying the original cost in the shipping fees. If the book typically costs $15, the seller might throw out a “GENEROUS ONE-TIME FREE OFFER!” and advertise the book at no cost (besides, of course, the $15-20 shipping in the fine print).
Aided by the psychological hypnotism of ‘free,’ these strategies result in increased sales at no additional burden to retailers.
“At the end of the day, we’re motivated by a variety of things to sustain us: Air, water, food, shelter, sex… and price,” says Cohen. “But people forget the old adage: If it’s too good to be true, it probably is.”
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When Michelle Fenner signed up to run this year’s Los Angeles Marathon, it got her thinking: Tijuana, Mexico, is only a 2½-hour drive from L.A. Why not take a trip across the border and buy some insulin for her son?
“It’s so easy to just go across the border,” mused Fenner.
This idea had been in the back of Fenner’s mind for a while. Her son was diagnosed with Type 1 diabetes nine years ago, meaning he needs daily injections of insulin to live. The list price of the modern generation of insulin has skyrocketed since his diagnosis. On one trip to the pharmacy last year, Fenner was told that a three-month supply of insulin would cost her $3,700.
That same supply would cost only about $600 in Mexico.
So, when she booked her trip to Los Angeles, Fenner said, “I decided we need to update our passports and go and get more insulin.”
Fenner is not the only one thinking like this. The U.S. government estimates that close to 1 million people in California alone cross to Mexico annually for health care, including to buy prescription drugs. And between 150,000 and 320,000 Americans list health care as a reason for traveling abroad each year. Cost savings is the most commonly cited reason.
‘Right To Shop’ Legislation
In Utah last year, the Public Employee Health Plan took this idea to a new level with its voluntary Pharmacy Tourism Program. For certain PEHP members who use any of 13 costly prescription medications — including the popular arthritis drug Humira — the insurer will foot the bill to fly the patient and a companion to San Diego, then drive them to a hospital in Tijuana, Mexico, to pick up a 90-day supply of medicine.
“The average cost of an eligible drug in the US is over $4,500 per month and is 40-60% less in Mexico,” PEHP clinical services director Travis Tolley said in an announcement of the program in October.
The program was part of a “Right to Shop” bill championed by health care economist and Utah state representative Norm Thurston in 2018. Thurston said there is not yet enough data to know how much in savings the program provides; the first patients traveled to Tijuana in December.
But, Thurston said, he expects that in the next six months, savings will likely be “in the ballpark of $1 million.”
There are some questions about traveling abroad to buy prescription drugs, however. The first: Is it legal?
According to the Food and Drug Administration, “in most circumstances, it is illegal for individuals to import drugs into the United States for personal use.” But the agency’s website does provide guidance about when it could be allowed. And the U.S. Customs and Border Protection’s website has a whole section on traveling with medications in its “Know Before You Go” guide.
While the guidelines may still raise questions, Thurston said, this sort of purchase for personal use is a widely established practice.
“When we talked to people about this, there has never been a single person who has been prosecuted for doing it. And it happens every day at every border crossing all over the country,” Thurston said.
“The general understanding is you can bring up to a 90-day supply of a prescription from overseas, even though it’s a technical violation,” said Nathan Cortez, a law professor at Southern Methodist University.
“My sense is the FDA does not want to worry about individuals going overseas and bringing back small amounts of prescriptions that last a few months,” Cortez said, adding, “That doesn’t mean the FDA couldn’t change its mind at any point and start cracking down.”
A second major concern that comes up in any discussion of medical tourism is about the quality of that imported medicine. According to the FDA, the reason it’s mostly illegal to import drugs is because the agency “cannot ensure the safety and effectiveness” of those drugs. In 2017, the World Health Organization estimated that 10 percent of drugs in developing countries were either substandard or falsified.
To address that problem, the Utah program sends its patients only to a designated, accredited Mexican hospital. Individual patients like Michelle Fenner are left to take their own precautions.
“You get a little nervous. You want to make sure that you have a reputable pharmacy,” Fenner said. To get pharmacy recommendations, she has been consulting with friends and acquaintances who have purchased insulin in Mexico. She’s calling those pharmacies now to make sure they have the type of insulin she wants to buy. When the March 24 marathon gets closer, she’s planning to call ahead with her order.
Fenner, who splits her time between Dallas and Arvada, Colo., said the amount she’s expecting to save on insulin could warrant multiple trips to Mexico every year.
Fenner is just one of the growing number of activists online who are discussing the great lengths they go to — sometimes literally — to afford insulin. Lija Greenseid is another. Her daughter has Type 1 diabetes.
Almost one year to the day after her daughter’s diagnosis, Greenseid and her family were visiting Quebec City, Canada, in July 2014. Her daughter’s blood sugar started spiking and Greenseid feared her insulin might have gone bad, so she went to a pharmacy. With no prescription and fearing that her daughter’s life was on the line, Greenseid was prepared to pay a fortune.
Instead the box of insulin pens that normally costs $700 in the U.S. was only around $65 or so.
“At that point I started tearing up. I could not believe how inexpensive it was and how easy it was,” Greenseid said.
“I said to [the pharmacist], ‘Do you have any idea what it’s like to get insulin in the United States? It’s just so much more expensive.’ And he turned to me and said, ‘Why would we want to make it difficult? You need insulin to live.ʼ”
The more Greenseid traveled with her family, the more they realized how inexpensive insulin was everywhere except in the United States. In Nuremberg, Germany, she could get that $700 box of insulin pens for $73. The same box was $57 in Tel Aviv, Israel, $51 in Greece, $61 in Rome and $40 in Taiwan.
“We get so accustomed in the United States to thinking that health care has to be difficult and so expensive that people don’t even consider the fact that it could be so much easier and less expensive in other places,” Greenseid said. “In fact, that is the case in most countries.”
This story is part of a partnership that includes Side Effects Public Media, NPR and Kaiser Health News.
This question was asked of The Lord, for a brother in Christ: Lord, what is the #mark of the #beast, in the #Bible?
[The Lord answered] My #son, why ask of Me such things? Rather, consider the #marks you have taken. Are you #clean? Where does your #allegiance lie? Is it given to the things of #men and to the lusts of this #world? Or does it belong to God, longing always to know the deep things of #Messiah, whom you call Christ? Therefore, seek first your own #salvation; dwell not on outward things of #evil. For evil has lost its grip on the #redeemed.
Yet for the sake of all those who shall come to #read these #words, I shall answer you, that they may #hear and know and remember: The mark, this mark of the beast, is a choice, a #grave error. Yet as of this #day, it remains merely an #invention of #man, a #device, a #stamp. Yet there is an evil one among men who will gain #power and much #prestige, who will force everyone - great and small, #rich and #poor, #free and #slave - to receive a mark in his #right #hand or on his #forehead. The #technology exists; its #production has commenced. Thus that which was created for #good shall be used for evil, that the few may gain #control over the many, that no one may #buy or #sell unless they have the mark, that is the #name of the beast or the #number of its name, as it is written. My son, what you seek concerning the #end of the #age, I have already given to My #servant, #John, written in the #book called #Revelation. And that which was given to John, I now bestow upon My servant, #Timothy, that all those who have ears to hear may hear the sound of this #Trumpet and #escape, for the #Day is at #hand. For as it is written: The Lord God does nothing without revealing His #plans to His servants, the #prophets. Therefore that which you have considered, and that which you have #heard, is #true. And oh how #modern man glories in his own #creations, taking much #pride in the #inventions of his #mind. Look how he revels in the #works of his #hands. Yet they shall be his undoing, for even now he has brought #destruction upon his own #head. For in his pride he has opened the #door to the evil one, and on #account of his great arrogance has he made it possible for the man of #perdition to #rule over him; by his own works he has condemned himself to #death!
Why, O peoples of the #earth, do you forge #shackles and secure them about your #feet?! I tell you the #truth, you are all captives, #slaves to your own evil #thoughts and #desires! Therefore, forsake all this #madness and return to Me! Call upon My #name in #sincerity and in truth, and you shall truly be #free! For I hold all the #keys; even over #death and #Sheol do I have complete #authority. For as it is written: If The Son sets you free, you are free indeed! Says The Lord.
MANY YOUNG Britons believe that the housing market is stacked against them. And who can blame them? In the past two decades house prices have doubled in real terms, because of both tight planning restrictions, which have limited the supply of homes, and low interest rates, which have stoked demand for them. Theresa May, the prime minister, has described the scarcity of housing as “the biggest domestic policy challenge of our generation”. But the reality is that it challenges some generations more than others. Elderly folk, who bought their houses before the boom, own a huge slice of overall housing wealth relative to their share of the population (see chart). It is a different story for youngsters. A 27-year-old living today is half as likely to be a home-owner as one living 15 years ago.
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Yet some economists spy a silver lining for millennials. The thinking goes that, within a decade or two, baby-boomers—the bumper generation born between roughly the early 1940s and early 1960s—will begin to sell up, as they first start to downsize, then move into elderly people’s accommodation and, eventually, to the great old-folks’ home in the sky. As their properties are put on the market, supply will rise, depressing prices and bringing ownership within reach for more people. This is much talked about in America, where a recent article co-authored by an economist at Fannie Mae, a government-backed mortgage provider, pointed to the “coming exodus of older homeowners”.
Back-of-the-envelope calculations give an idea of the effect on house prices when boomers begin to sell up. England’s owner-occupier baby-boomers live in houses with an average of three bedrooms. If all of them downsized to homes with two bedrooms, that would free up housing equivalent to around 2.5% of the current stock, reckons Ian Mulheirn of Oxford Economics, a consultancy. Most empirical work shows that a 1% rise in the housing stock leads to a 2% fall in prices and rents, all else being equal. On that basis, a mass-downsizing would imply a cut in prices of about 5%.
Yet so far the British boomers are in no rush to scale down. In contrast to America, Britain does not have much of a downsizing culture. By one calculation just 40% of Britons who owned their homes at age 50 will move house before they die. A paper published in 2011 by James Banks of the Institute for Fiscal Studies, a think-tank, and colleagues, provides convincing evidence that geography and climate play a big role. In America oldsters can move to sunny climes like Florida. Britain is a bit short on such places—Cornwall, lovely as it is, is not known as the “Sunshine County”—so most pensioners don’t bother. An intrepid few retire to the continent. But Brexit is likely to make that harder.
Government policy also discourages downsizing. Stamp duty, a tax on homebuyers, makes moving expensive. As house prices have risen in the past decade, the average amount of stamp duty charged per house-purchase has risen by half in real terms (homebuyers pay around £8,000, or $10,200, in stamp duty). Meanwhile, there is little direct cost associated with remaining in a large empty nest. Council tax, an annual levy on residential property, is based on valuations from 25 years ago and falls relatively lightly on big, pricey houses.
If downsizing is unlikely, boomers may at least sell up when they move into an old people’s home. But here, options for elderly Britons are also limited. Perhaps 3% of British over-65s are in some sort of residential care, compared with more like 5% in America. Lawrence Bowles of Savills, a property firm, points out that Britain is under-supplied with good retirement housing. More than half of the existing stock was built or last refurbished more than 30 years ago. And the design of the social-care system means that most British pensioners do not need to sell their home to pay for their treatment. In their election manifesto last year the Conservatives floated a plan to include more people’s housing wealth in the test of whether they had the means to pay for their own care. After the move was dubbed the “dementia tax” it was hastily scrapped.
All this means that it may be only when baby-boomers start to check out in a more permanent way that lots of houses begin to change hands. The most common year of birth for the baby-boomer generation is 1947. Since their most common lifespan is around 87 years, Peak Death could occur in 2034, when Britain will see around 15% more fatalities than in 2018. It will be very sad. But for house-hunters it will be a help. By that time baby-boomer deaths will be pushing down on house prices by around 0.7% a year.
Yet just as the housing crisis affects different generations unequally, the impact of the great baby-boomer sell-off will have an unequal effect on different groups of youngsters. The boomers will leave record amounts of wealth to their descendants. Data are poor but according to our calculations, roughly £100bn are left behind each year. Over the next 20 years the total value of bequests is expected to more than double, peaking in 2035, according to a paper by Laura Gardiner of the Resolution Foundation, a think-tank. Most of this unearned wealth will not be taxed, on current plans. By 2020 a couple will be able to pass on a house worth £1m tax-free.
Most of the inheritance bonanza, however, will go to a relative few. Nearly half of non-homeowning millennials have no parental property wealth at all, according to Ms Gardiner’s research. The other half will be able to use their inheritance to gain greater purchase in the housing market, for themselves or their own heirs and heiresses. A class of wealthy oldsters is moving on, only to be replaced by a class of wealthy inheritors. Demography will put downward pressure on house prices. But some people have a lot more to look forward to than others.