Saying Yes to Up-Sell is Saying No to Being Frugal
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Emma and I went to a pretty fancy restaurant to celebrate my wife’s birthday. After we sat down, our waitress pleasantly asked us “Would you like some wine tonight?” We just experienced a form of up-sell.
What is Up-Sell
Up-sell is the act of suggesting a higher priced product or service to a customer who is about to purchase. What we experienced at the restaurant is no different than the cashier at Starbucks asking us to buy a grande sized mocha instead of tall or at McDonald’s when the cashier asked whether we wanted a combo rather than just the sandwich.
What It Means for the Company
These forms of up-sell are very popular because it works. While at the restaurant, almost everyone that she asked ordered wine. If she didn’t ask on the other hand, I bet half of those people will forget to do so.
What It Mean for Customers Like Us
On many levels, up-selling is actually good for customers like us. We are given a choice which helps us realize that there are better options for our purchase. When we are at McDonald’s, we are reminded that we can get that extra drink and fries at half price by buying the combo.
There is however one negative side effect of up-selling because agreeing to buying the more expensive product is not a frugal practice. We all know that we are not too disciplined when it comes to spending. When we are given a choice to buy the better product, chances are we will. At the restaurant, everyone that ordered wine ended up paying more. They ordered it because they wanted it, not necessarily because they can afford it.
When someone gives us a choice for a better product, we might not instantly realize how it affects us long term. Sure we had a great time drinking wine, but what about the mortgage payment due next month?
What We Should Do
Now that we understand what up-selling is, we made a very good first step in keeping our wallets intact.
We routinely make purchasing decisions and if you are like me, sometimes that decision happens on the spot. We wait until we are at the register to figure out which combo we want, we ask for pricing on a product without doing research, and we really only decide what to buy until we see it at the store.
On the other hand, if we already know what we want before we have to decide, it would be much easier to assess the effects of the extra choice when it’s presented to us. Just to illustrate, if we knew that we wanted two sandwiches with water before we go into McDonald’s, we won’t end up with a combo and end up paying more. Who really needed all the extra sweets and oil?
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Weekly Roundup: Relaxing Weekend Edition at Clever Dude Personal Finance & Money on August 2nd, 2008 at 6:46 pm Says:
[...] Money Ning warns us about “Up-Selling“ [...]
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Weekend Linkage - August 3, 2008 on August 3rd, 2008 at 9:25 am Says:
[...] Saying Yes to Up-Sell is Saying No to Being Frugal “There is however one negative side effect of up-selling because agreeing to buying the more expensive product is not a frugal practice. We all know that we are not too disciplined when it comes to spending. When we are given a choice to buy the better product, chances are we will.” [...]
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Personal Finance Review - Family Edition : Money Smart Life on August 3rd, 2008 at 11:20 pm Says:
[...] Money Ning discusses Upselling and the Supersize mentality. [...]
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squawkfox » Carnival of Personal Finance: City Slickers Edition on August 4th, 2008 at 4:14 am Says:
[...] decodes corporate up-selling techniques in Saying Yes to Up-Sell is Saying No To Being Frugal. MoneyNing suggest we “resist the temptation to up-sell tactics by always having a [...]
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Carnival of Personal Finance #164 : Carnival of Personal Finance on August 4th, 2008 at 6:28 am Says:
[...] Saying Yes to Up-Sell is Saying No to Being Frugal [...]
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[...] Ning talks about up-selling and how it can affect your budget. I always find posts about negotiations interesting - buying a car, house etc and learning about [...]
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I just fought off the temptation to succumb to an up-sell of grand proportions about an hour ago.
I was in the mall and browsing engagement rings. After wandering into the first jewelry store, I was approached by a salesman who asked me about my engagement ring budget, which I informed him was no more than $3,500.
Almost instantly, he ran over and grabbed a ring with an $7,995 price tag and told me that I could purchase it for a steal at $4,800. Granted, the ring was absolutely gorgeous and I wanted it badly, but my practical side kicked in and I immediately told him that it was out of my price range.
It’s posts like this that help me to keep my spending / splurging in check. Thanks for everything you do!
Great post. This reminds me of Dr. Cialdini’s Weapons of influence. The atmosphere is set, you are there to have a great dinner and everyone is just so nice to you. Good tool for sales and reminder for those being sold.
- Richard
Great post. I don’t drink and I rarely dine out, so the choice to order wine is never a difficult one for me. But when you do order wine, not only do you end up paying more for it, but you end up tipping more because your final bill is higher.
I worked at Togo’s, a sandwich shop, for a brief time several years ago. We were trained to always ask our customers if they wanted to add the combo - soda and chips - for $1.19. About 99% of the time, my customers responded yes or “why not?” just because I asked.
Jimmy: I’m glad it helped. There are times when spending more is appropriate and there are times when spending more is a result of a lack of plan. If you are prepared, you will be able to better reduce overspending.
Richard: Having a sales background, I can tell everyone that it definitely works very well. As a consumer, we just need to realize when it is a good choice for us and when it is really just a waste of money.
Penelope: There are times when ordering wine isn’t a bad choice but most of the time it’s really just a chance for us to spend more money.
Togo management is smart. They know that it is an easy way to make more money for them. If anything, their profit margin is much higher for the drink and chips than the actual sandwich!
*sigh* I had to up-sell my butt off working at a local movie theatre. It was part of your job… someone wants a small drink, you try your hardest to make the large irristable. Yes, it is more product for your money but do they really need the exta 6 gallons of bathroom-break-inducing soda? No.
At least most of the time, my customers said no politely because they understand we’re forced to do it. 1 out of 10 though would give me a 5 min lecture on getting what they asked for, and telling me to keep my yap shut and just dish the popcorn. Ah, memories.
Yes, that should be *irresistible lol
I really enjoyed reading this article. However, I don’t really think wine is an example of up-selling. Don’t get me wrong, wine quite definitely ups the bill and is always, always substantially overpriced at a restaurant.
That said, it’s also integral part of what many consider the fine dinning experience. Paired with the right foods, it intensifies the flavor and ambiance of an overall meal.
Obviously, I value fine wine and food, and thus I find it worth the extra money. Just because people may spend more on dinners does not mean they aren’t considering their financial responsibilities. One’s financial needs are mix shoulds (saving for retirement, a house, having an EF) and then value purchases (entertainment, cars, travel, food) which are very subjective.
This points to a larger issue. It’s possible to scrimp on everything and have a massive savings… but when is it worth it to spend?
Never ever thought about this technique before. Most of the restaurant practicing it now. Just we don’t realize it. It is another business technique.
I think we can utilize this technique in online businesses too. I’m not sure how it is gonna work on blogging. But, the possibility of applying Up-Sell method in any business is endless. Thanks for giving out this great idea.
I think this method is quite profitable, isn’t it?
Misch: I’m so sorry to hear! Do you actually make more commissions or does your manager just stand next to you listening to how you sell it to your customer?
Allese: It’s worth it to spend when you already have a plan to save and you are meeting that plan. Otherwise, it’s probably not worth it!
Atniz: No problem. I hope that as a consumer, you are able to recognize it and as a business owner, you are able to use it!
I don’t think that I would appreciate anyone doing some up sell on me.
I think its not being wise to spend for a product with low quality rather than purchasing a product worth the price and quality.
My husband an I went out to dinner the other night…I wish we had just splurged on a little wine. But, the waitress told us the specials (no prices of course) and my husband ordered one. I figured, well everything on the menu’s around $15 or $20 the special can’t be that much more…HAHA WRONG…it’s was $35 I almost had a heart attack when our bill came out. But lesson learned…ALWAYS ask the price! Don’t know if this counts as upselling but I felt like a schmuck.
I’ve noticed that many Vietnamese and Thai restaurants don’t upsell — in fact they don’t promote their food at all. Perhaps it’s a cultural thing.
Issues of frugality aside, if a waitress suggests an alcoholic beverage, I’m much more likely to try it. I want them to ask. It helps to rationalize the purchase, especially if no one else in my party happens to order alcohol.
The up-sell pressure is so all-pervasive now that just finding a non-combo option at a fast food place is nearly impossible. I also love the way the servers are become totally bewildered when you just ask for a sandwich and a water.
Going “non-combo” ruins their system. I went into Whataburger recently, asked for a grilled chicken sandwich and a water, then sat down. At Whataburger, they’ll bring your food to you…my server showed up with the sandwich, a soda and fries. I pointed out that I hadn’t ordered the soda or the fries and, totally bewildered, she turned and headed back to the counter….I caught up with her and pointed out that she still had my sandwich and could I please have it?
And they totally do not understand that although getting a “combo” is cheaper than ordering everything separately, it’s even less expensive to simply buy less food, period. (And better for your waistline too, LOL.)
Cathy Sykes
http://www.moneytospare.net
Today, I experienced the opposite - one of those rare cases of a down-sell!
It made me feel good!
We have domestic service with Dish Network, and my wife wanted to add an international channel.
I called up to add it, and the guy told me I had to get a second satellite dish for $56.
Somehow we got disconnected (turned out to be lucky for me) and I called back and spoke to a woman.
She told me that, instead of paying $56 for a second dish, they now have a “super dish” that can take the place of both the international and domestic dishes. I could get my domestic dish swapped for this one for free.
So, now, instead of having to pay $56 and having 2 dishes wired up together on the side of my house, I’ll pay nothing, and have only one dish to worry about!