The Scarcity Effect

There are many psychological principles that retailers exploit to get us to part with our money.

One of these is known as ‘The Scarcity Effect.’

It relies on the notion that human beings place a greater value on items that they believe to be in short supply.

Thus, when something has limited availability, people are willing to pay greater amounts for that product or service.

There are a number of ways ‘illusions’ of scarcity are used to increase sales. Examples that you may be familiar with include: one-off special events, special collaborations, clearance sales and holiday specials. ‘Black Friday’ is perhaps the ultimate combination of these tactics which results in this annual retail zombie apocalypse.

Undoubtedly, the master of this strategy though is the diamond industry.

Although around a whopping 135 million carats are mined annually, most of them are stockpiled in order to keep prices and desire for diamonds perennially high. 

Less ‘a girl’s best friend’ and more a retailer’s best friend you could argue. 

Original Source