The cost of free delivery

An online seller offers free delivery above a threshold. A shopper with eighty thousand dong in the basket adds an item they did not want in order to reach one hundred thousand and avoid a fifteen-thousand charge.

The shopper has spent twenty thousand to save fifteen. Asked directly, almost nobody would make that trade. Presented as a threshold, a large proportion of shoppers do, and the effect is reliable enough that the threshold is set by testing rather than by cost.

The mechanism is about how the two amounts are categorised. The delivery charge is felt as a loss — money handed over for nothing received. The additional item is categorised as a purchase, which feels like an exchange. Losses weigh more heavily than equivalent costs, and the threshold is designed around the difference.

There is a second effect. A charge that appears at the end of a process, after the shopper has chosen everything, feels worse than the same amount included in the prices from the start. This is why delivery charges and booking fees generate complaint out of proportion to their size, and why some regulators now require total prices to be shown from the first screen.

The defence against both is a single question asked before clicking: what would I pay to have exactly the things I actually want? If that number is lower than what is in the basket, the difference is what the threshold cost you.