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I was recently at a bricks-and-mortar shop selling some equipment. I knew exactly what need I had and had a mental picture of the product I expected to purchase.

The store offered two different products that both would have (apparently) met my needs. One product (A) was nearly double to price of the other (B). Product A was very close to what my mental picture (based on advertisements, seeing other people with this product) was of what I needed. Product B looked totally different.

When I approached the customer service representative, I explained the background to my need and asked what the difference between the two products were. The representative suggested that I get product B which was cheaper and would fulfil my need, so there was no point in spending the extra money to get product A.

Of course, I bought product B. But on the way out I couldn't help feeling negatively about the purchase. Some people might say "what an honest business person" for not trying to rip me off. Maybe it's a product of living in a capitalist consumer-driven society, but something disturbed me about the employee's failure to upsell and try to get me to buy product A. I had not expressed any unwillingness to pay for product A and even went so far as to say that I was interested in a quality product.

From the point of view of economics, why am I unable to help feeling negatively about this purchase? Is there ever any economic benefit to not upsell a customer?

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    "From the point of view of economics, why am I unable to help feeling negatively about this purchase?" - This is more of a psychology/behavioral economics question (since economists normally means something different when they talk of "consumer sentiment") but your second question is a great one.
    – John Bensin
    Commented May 19, 2013 at 16:56
  • Yeah you're right the first one is more psychological. But it just got me thinking if this feeling was a reflection of an economic principle. My thinking is that from a customer's perspective, increased price generally correlates with increased quality/value/desirability/novelty and when the proprieter not only fails to upsell but actually down-sells it causes confusion in the mind of the customer. The customer then questions what motive the proprietor could have for attempting to sell a lower-value item
    – ose
    Commented May 19, 2013 at 17:35
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    You're right in thinking consumers generally correlate increased price with increased quality. One of the concepts you're thinking of is prestige pricing and it's a neat idea to study.
    – John Bensin
    Commented May 19, 2013 at 19:01
  • You likely receive some utility from the bargaining process itself - you may feel valued by a salesperson when they spend the time and interest in selling to you personally. Without this, you may feel that the business is not giving you the interest you deserve as a customer with the means to buy more than you actually intend to buy. IE, don't they want my money? What am I, chopped liver? :) However, consider how you might have felt if you'd been persuaded to pay for more than you needed. The company that doesn't inappropriately up-sell may reap a longer-term loyalty benefit (no rip-off).
    – JAGAnalyst
    Commented May 20, 2013 at 19:55
  • @JAGAnalyst the thing with the no rip-off thing is that I expect a company to try to sell me the highest value item and go down from there. Ever since before the invention of currency when people would barter you would start at an exuberant price and move down. Again its probably psychological but it just feels like the company is not fulfilling its logical role in the exchange of goods. If you take a multi-agent system with independent actors you assume that each actor attempts to maximise their self-interest.
    – ose
    Commented May 21, 2013 at 8:24

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There are several different participants in the transaction, and you may not be aware of all the issues:

  • Generally the consumer wants to get the best deal possible. But you balance that by your own personality. You need something, but you may also want the coolest version of the product, or you go for bleeding edge technology. The employee doesn't know where on the spectrum you fall.
  • The employee may be hourly, or commissioned or some combination of the two. If they see no economic benefit to steering you towards the more expensive item, they will not be motivated to do so. Of course if they believe their job is at risk they will act differently. Even if they receive a commission on sales volume they may feel they can generate a bigger volume by completing more transactions, instead of investing 30 minutes of their time trying to convince you to get the more expensive item.
  • The store may make a bigger profit on the less expensive item, or they are pushing the item because they are overstocked. This can also be reflected on the commission paid to the employees.

In some business (fast food) they are required to ask if you want to super size, they are expected to do this at every transaction, but aren't paid more if you buy more.

The employee can also decide that too much pressure to up-sell may push you to purchase the item online. That will cost them a commission, the store location a sale, and maybe drive you to a different company.

It is also possible they don't have the training to be able to explain the difference between the items.

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