Why people think $20 is more expensive than a $20 increase

If that title didn’t make sense, it will after I explain!

So where I work, you can buy a parking pass for $100.

If you decide not to, the cost of parking is $6/day, and if you consider there are about 20 working days, that’s $120/month.

Just recently, the parking cost went up from $6 to $7, a full dollar more, which means another $20/month extra, for a total of $140/month.

(The parking passes stayed the same locked-in price at $100.)

Now, people are starting to complain and ask for the monthly parking pass because no one wants to pay $40/month more if they can help it!

What I find funny about all of the above, is that most people found paying $20/month more to be ‘acceptable’ but when it went up another $20/month, they started complaining, especially when the company told them: Sorry, we can only give out 250 passes. You’ll have to go on a waiting list.

I know that $40/month is more substantial than the original $20/month, but to me, money is money, no matter the amount.

If I was told I could get a monthly pass for $100, or face paying even an extra 1/month, I’d get a pass as soon as possible!!!

I was then reminded of a study that stated that for consumers, if they are told the original price is $120 for a month, even if they could sign up for a discount plan that would save them $20/month, they don’t see the $20/month as a big deal.

It is the increase over the original stated amount that people take more seriously.

That means that even if the original price was an acceptable extra $30/month over the discounted pass, they will see ANY increase, even $10/month extra as unacceptable.

So readers, have you experienced something similar?

And what is your price limit for an ‘acceptable’ increase per month over a more finicky, but discounted option?

$1? $10? $20?

About the Author

Just a girl trying to find a balance between being a Shopaholic and a Saver. I cleared $60,000 in 18 months earning $65,000 gross/year. Now I am self-employed, and you can read more about my story here, or visit my other blog: The Everyday Minimalist.