Are you really saving at the pump? In New Zealand (and around the world), fuel companies often use psychological tactics to make you feel like you’re getting a better deal than you actually are. This article breaks down the tricks behind fuel pricing, how they affect NZ businesses, and how you can use these insights to make smarter, money-saving decisions when refuelling.
Read more: Is your business really saving with discount days?
How Fuel Pricing Psychology Works
Fuel companies use clever pricing tactics to make customers feel like they’re getting a great deal – even if the actual savings are small or in some cases, non-existent. Studies show that most people are drawn to deals simply because they feel good, even if the savings are minor.
One common strategy is the illusion of savings. Seeing a “cents off” discount or special offer creates the impression of a bargain, even when the price drop is minimal. These small discounts often draw crowds, with customers lining up, thinking the savings will add up.
While for the everyday consumer a couple of dollars off over time may add up to some savings, for NZ businesses, these savings are minimal, especially when you take into account the time your employees will spend queuing to fill up on discount days.
Loyalty programs are another powerful psychology tool. Many fuel brands offer points or rewards to keep customers coming back. While these programs do offer some perks, they can also lock customers into buying from the same brand, even if prices are higher than at nearby stations. So, while loyalty rewards seem helpful, they often mean paying more in the long run.
Two Common Pricing Tactics Fuel Companies Use
Fuel companies have a couple of go-to tactics to keep customers returning and spending more, such as
Discount Days
Discount days are one of the most common strategies. These days seem to offer big savings, but the reality is often less impressive. Some customers have noticed that prices tend to be slightly higher just before discount days, or the “discount” is barely below the usual price. This makes the savings seem bigger than they really are.
A Reddit user on a thread about NZ discount days pointed out “AFAIC 10cpl discount day is actually 4cpl discount day, because it’s always 6cpl off anyway so this is just an additional 4cpl, and personally I’m not going to queue for 15 mins to save $2.”
Plus, motorists often don’t take into consideration the cost of fuel to drive out of their way to nab these “deals”, meaning you could be losing money by trying to save on fuel costs.
Displayed Prices and Signage
Pricing displays are also designed to influence customers. Big signs with “savings” or “discounts” draw people in, often leading to quick decisions at the pump. These flashy displays make it easy to miss nearby stations with lower everyday prices. In the end, the appeal of a visible discount often wins over a better deal just down the road.
Why Do These Fuel Pricing Tactics Work?
Fuel pricing tactics work because most people are naturally drawn to deals and discounts. Getting a bargain – especially on a regular expense like fuel – just feels good. When petrol prices are high, even a small discount can bring a sense of relief, making customers feel like they’re winning, even if the savings are minor.
This mindset often leads people to chase discounts, collect loyalty rewards, or wait in long lines, hoping to save a few dollars. As one Reddit user pointed out, “Businesses wouldn’t be offering it unless it caused us to spend more overall.”
The appeal of a deal can be so strong that it sometimes blinds us to whether we’re actually saving in the end.
The Impact of Fuel Pricing Psychology on Your Business
For businesses, these pricing tactics can actually lead to higher overall fuel expenses. SMEs with fleets or frequent travel needs may find that chasing small savings means more time spent refuelling, missed chances for better deals, or even higher costs in the long run.
The hidden costs of chasing discounts add up, too. Spending extra time in line on “discount” days or choosing a pricier station because of loyalty points can lower efficiency and increase costs. For businesses that rely on regular fuel usage, these small decisions can have a surprisingly big impact on monthly expenses.
3 Strategies for Businesses to Outsmart Fuel Pricing Tactics
Understanding fuel pricing psychology can help your business make smarter choices and employ strategies that will save your business money on fuel costs.
1. Use Fuel Cards
Fuel cards are a great tool for keeping fuel expenses predictable. They offer steady discounts and come with tracking features that help you see exactly where your fuel budget is going. By using fuel cards that provide real savings and steering clear of loyalty programs that may not benefit your bottom line, your business can avoid falling for common pricing tricks and keep costs steady.
2. Use Price Comparison Apps
Free apps like Gaspy let you quickly compare prices at nearby stations, helping your business choose the most affordable option each time. By using these tools, drivers can locate the best deals and avoid paying extra on so-called “discount” days when savings might not be as high as they seem.
3. Encourage Smart Refuelling Habits
Set clear guidelines for your drivers to fuel up at stations with the best everyday prices and avoid crowded discount days when savings don’t justify the wait. With a bit of planning, your business can skip the emotional pull of last-minute discounts and make consistently cost-effective choices.
The Future of NZ Fuel Prices
New Zealand’s fuel industry has faced a bumpy road, with events like COVID-19 and the Russia-Ukraine conflict causing major swings in oil prices. Although demand and revenue took a hit during the pandemic, both have bounced back, pushing fuel prices to a projected 246.6 cents per litre by 2024-25.
As global oil prices begin to settle, businesses could see some relief at the pump in the near future. For NZ businesses and consumers, keeping an eye on these shifts can make it easier to plan and stay ahead in a constantly changing fuel market.
Find the Right Fuel Card For Your Business
Ready to make better fuel decisions? Explore fuel card options that simplify savings and help your business navigate the fuel pricing landscape. With the right tools, you can stay one step ahead and keep fuel costs under control. Check your eligibility today!
Nov 06, 2024
Compare Fuel Cards NZ Team
Last updated Nov 06, 2024