A question for sales professionals.
What’s most effective in increasing sales, “10% off” or “we pay the sales tax”?
Sales tax around here is 8.75% (in itself a bargain ;)).
Some people seem to get excited about the tax one. Do they think about it, or am I missing the point. Some of the advertisers do imply that the buyer is getting away with something.
Peace,
mangeorge
Well, let’s say the item it $100
10% 0ff (then sales tax on the new price)
$97.88
10% Off (Plus sales tax on the original $100)
$98.75
“We pay sales tax”
$100.00
So, 10% off with sales tax based on the new price is the best, and ten percent off with sales tax based on the original price is still a better deal. Either way, we’re talking about a few dollars on the hundred, so unless this is something big like a $1000+ TV or a car, it’s not gonna amount to a ton of money.
I’m not sure where the question is. Would you rather have the base price +8.75% or the base price - 10% + 8.75%? (that’s with the +8.75% based on new or original price), unless you’re sales tax is over 10% you’ll be better off taking the 10% off and still paying the sales tax.
I did the same math, except that I’m pretty sure tax is calculated on the discounted price. So it’s $100 vs $97.88. No, not a huge difference. Either way, the 10% off is cheaper.
I’m wondering which ad brings in the most buyers, and why some people I know prefer the “we pay tax” offer.
A past gf of mine worked in a Woolworth’s. When they had a lot of one color of an item, they’d put out only 2-3 of those and a bunch of the other color. The “fewer” color on display always outsold the other. In fact, the total sales were slightly higher than when they displayed a lot of both. If it makes any difference, these were women’s items.
We have a “Sales Tax Holiday” in Texas for a weekend every August. Depending on the city, sales tax is somewhere between 6 and 8.25%. This sales tax holiday encourages more crowds than I imagine any 10% off sale would.
The “We pay the sales tax” probably just gives people a feeling of sticking it to the man. Wheather then ‘man’ is the gov’t (tax holiday) or the shop owner who now has to pay the tax out of the profit.
Come to think of it, not that this matters entirely. When they say, ‘we pay the sales tax’ I wonder if they sell the item at $100 and the cough up the $8.75 on their own, or if they sell the item at $100 but then tell then report the sale as $91.96 and pay the 8.04 as tax. Basically, tell the customer they’re not paying tax but really it’s just on sale and happens to work out to $100 with tax. Of course I don’t know tax law (or truth in advertising law) that well, their may well be a rule against tell the customer one thing and the gov’t another.
That’s exactly what I’m talking about.
Yeah, sales tax is a major irritant, as is most any tax. You can nearly always wangle 10% off (except at big box stores), but removing an irritant makes people happy.
Well, sales tax doesn’t irritate me. But that’s because I know that my governor loves me, and that my nation-state leads the world in all things good.
Yeah!
Peace, and Love
mangeorge