Dear Jill: Your column is the first thing I read in the morning. I love couponing and your answers are so informative. I have a question for you about the ads on TV that sell an item for $20. I can buy it locally for that price, too, but if I “order now” they will send a second one for free, and if I “call now,” shipping is free. So, what’s the catch? Are they selling my name or what?
— Gerane S.
Oh, the ubiquitous “As Seen on TV” infomercial. Designed to showcase a product’s virtues in a fast-paced, energetic format, an infomercial’s goal is to educate a shopper about what a product can do for them (especially if it’s something new and wonderful!) as well as to encourage shoppers to purchase the product quickly. Often, the magic selling price is $19.99, and there are numerous calls to action — bonuses added to the offer if you “act now.”
So what exactly is the catch? Most infomercials are not scams — you will receive the product you’re buying and you will pay the price that’s advertised. Consider this though – the $19.95 price point is not chosen arbitrarily. Numerous studies have shown that $20 is a “magic” price point for shoppers – it’s not a huge amount of money with which to take a chance on something new. If an ad is telling you to “Act now, and we’ll send a second one free,” rest assured that it isn’t free. The company planned to sell you two items all along and throwing the second in “free” is an attractive incentive designed to push you further along the decision-making path, encouraging you pick up the phone or go online to order.
I have some knowledge of what goes on behind the scenes with infomercials, as I’ve previously been approached about bringing my Super-Couponing DVD workshops to the infomercial market. I’m always interested in helping others learn to save money and shop smart, and I want to bring that knowledge to as many people as possible. But after going through part of the planning process, I felt that infomercials were not necessarily about helping shoppers.
First of all, it’s not all about the product. The infomercial, from a marketing standpoint, is designed to get you to buy, but the actual product you’re buying is just the tip of the iceberg. A product you purchase for $20 often costs less than $3 to make. The majority of the money made by the infomercial is rolled right back into marketing – buying more television airtime to keep the infomercial on TV.
Expect large shipping and handling charges. Even when shipping is “free,” once you’re ready to order, you may learn that the handling charges — the cost of packing up your order — have added an additional $10 or more. I’ve often seen the sales tactic of offering a second free item leaving the buyer to “just pay handling.” Handling fees are almost pure profit to the company.
Be wary of upsells. More money is made in selling additional items or services to someone who already has decided to order a product. One of my blog readers purchased a hair care product from an infomercial, and when she called to order, the operator talked her into buying a makeup line, too, because it was “only another $19.99.”
In the end, I decided not to take the infomercial deal. I was willing to overlook the possible “cheesiness” of being an “As Seen on TV” girl if it meant helping people learn to save at a price they could afford. But, as the deal progressed, the infomercial company began discussing selling my product for a much higher cost, versus my price of $9.99, and I didn’t want to lose my integrity or the trust of my audience by taking that deal.
Smart Living Tip: Many of the fun products and gadgets sold via infomercials eventually end up being sold in stores. If you can wait for “As Seen on TV” to show up on a store shelf near you, you’ll avoid shipping and handling fees, as well as possible upsells.