How Companies Get You to Spend Your Money

by Joel Fink

How Companies Get You to Spend Money photo

Ever wonder how companies get you to spend more money? They use these 6 tools to pry open your wallet! Find out how to protect your dough.

We’ve all been there.

You look at that expensive kitchen gadget that you never use, and you wonder; “Why did I buy that thing?”. As it turns out, you may have had some “help” when you made that decision to spend your hard-earned money.

Dr. Eva Krackow describes some of the techniques that companies use to get you to spend your money in her article From Presuasion to FOMO: How to Spot 6 Common Sales Traps.


Robert Cialdini, Professor Emeritus of Psychology and Marketing at Arizona State University, coined the term “presuasion”. The term is used to describe techniques that companies use to put the consumer in the right “frame of mind”, even before they make a specific offer or sales pitch.

In traditional stores, this technique includes things like offering free samples, pleasant background music or even piping in enticing smells. In the online environment it may include sending personalized emails to customers to thank them for previous purchases.

Research has shown that these types of “pre-sales pitch” activities significantly increases sales.

Start living better for less.

Debt Checklist

Subscribe to get money-saving content by email that can help you stretch your dollars further.

Twice each week you'll receive articles and tips that can help you free up and keep more of your hard-earned money, even on the tightest of budgets.

Subscribers receive a free copy of our eBook Little Luxuries: 130 Ways to Live Better for Less.

We respect your privacy. Unsubscribe at any time.

The Cocktail Party Phenomenon

Have you ever noticed that, even in a noisy room (like during a cocktail party), if someone says your name, you hear it?

This is called the “cocktail party phenomenon”. Companies use this technique to get your attention. By calling you by your first name, they increase the odds that you will pay attention to what they are selling. This technique is especially common with online retailers.

Price Anchoring

“Anchoring bias” refers to a phenomenon where people overly rely on the information that they already have instead of obtaining new information to decide.

Price anchoring is when companies make you feel like a certain price level is the “normal price”. This makes the sales price look like an exceptionally good deal.

For instance, you will notice that companies will prominently show you a “list price” before they show you the offered price. This sets the higher “list price” as a benchmark, so that the offered price looks like a bargain.


Framing refers to the way that companies “frame” the advertising or sales pitch to put the product in the best possible light.

For example, if I told you that 10 percent of the people that purchased this product did not like it, you would probably be concerned. However, if I told you that 90 percent of the people that purchased this product loved it, you would tend to think that the product is great.

Both statements provide the same information, but companies will usually “frame” their message to make their product look as good as possible.

Social Pressure

Humans are social creatures. Companies know this.

Advertising will stress the “popularity” of their product. How can you resist buying a product that everyone else is buying? Online marketers will show you how many people are looking at the same product that you are right now. This emphasizes the popularity of their product.


FOMO is an acronym that stands for the “Fear of Missing Out”.

Human evolution has programmed us to fear scarcity. Early humans very survival was threatened by a lack of food or resources. Consequently, the fear of missing out can be a strong motivator to make a hasty purchase.

Marketers use this knowledge to make a product appear scarce.

Products are often advertised as “limited time offers”. Online marketers will show you how many other people are looking at the same item, or how many of the items are left in stock, to make you think they may soon run out. Some online retailers even use ticking clocks or digital countdowns in order to stoke a sense of urgency.

Defending Yourself

So, now that you know some of the techniques that marketers use to get you to spend your money, how do you defend yourself?

There are several specific actions that you can take:

  • Compare prices from multiple vendors.
  • Budget your spending and don’t spend more than your budget.
  • Look for independent information about the product.
  • Resist the pressure to make a quick decision.

Perhaps the most effective thing that you can do to defend yourself is to delay the purchase. This is especially true for an expensive product. Even a short delay may give you the time to do some research and avoid an expensive mistake.

Reviewed September 2021

About the Author

Joel Fink is a retired CPA and financial services executive living in Dallas, Texas. He enjoys writing articles that help real people with simple ideas to manage their money and improve their lives.

Follow Us

Little Luxuries

Subscribe to The Dollar Stretcher, our free twice-weekly newsletter aimed at helping you live better for less on the money you already have!

Subscribers get a copy of our ebook Little Luxuries: 130 Ways to Live Better...For Less for FREE!

Your Email:

Pin It on Pinterest

Share This