This is a guest article by Kimberly Palmer. Kimberly Palmer is the author of Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back, which was published by Ten Speed Press this week. The following post has been adapted from the book.

I’ll admit it: I was recently suckered into spending more than I should have on a can of paint. I fell victim to one of the classic mistakes of modern-day shoppers: Believing the posted price was the actual price. So when I purchased the $45 can of sea-green paint for my daughter’s bedroom, I neglected to ask for “the contractor’s price.” Those three little words would have gotten me at least a 10 percent discount.

Retailers use all kinds of trickery, including lying about prices, to get us to spend more than we otherwise would. It’s tight times for them, too, so they’re resorting to increasingly extreme measures, sometimes lifted from the pages of psychology experiments. As I was researching my book Generation Earn, I discovered these three most common ones. Luckily, as long as we know what to look for, we can beat companies at their own games:

1. Offering us a reward that’s really not so rewarding. It turns out those credit card rewards, even an enticing $200 gift certificate, aren’t free, after all, because we spend more in order to get them. Behavioral economists even have a name for it: “purchase acceleration.” Because we’re so excited to get our free iPod or airline ticket, we spend more on our credit cards. Since reward credit cards typically carry an interest rate that’s about two percentage points higher than non-reward cards, anyone carrying a balance is paying a steep price for those rewards.

   It’s not only credit card companies employing this technique. Ever been offered a loyalty card at your favorite coffee shop, or salad joint? It turns out purchase acceleration applies there, too. In one study by a Columbia University professor, people bought ten coffees five days faster than they would have otherwise in order to snag their free cup. Just say no to loyalty cards, and you’ll end up saving money – and simplifying the paperwork in your wallet.

2. Hypnotizing us with sounds and smells. It sounds like some kind of dark magic straight out of Harry Potter: Stores have discovered that wafting a sweetish scent of citrus at us or manly smell of Rose Maroc can actually entice us to spend more money than we otherwise would. That’s why Sony Style uses a citrus scent with vanilla overtones in its stores. (In that case, the company is trying to make its electronics less intimidating to women.) More recently, Sony Style started using a bamboo scent to send the message that the company is going green.

   They might be onto something; research from Washington State University shows that using Rose Maroc in men’s clothing stores and vanilla in women’s can increase shopping time, number of times purchased, and dollar amount spent. Research has also found that music can have a similar effect.

   So be aware of the smells coming your way when you’re out and about, because researchers say they work on an unconscious level, sort of like pheromones.

3. Posting an inflated price that’s just for the most gullible shoppers. In the case of the paint, that gullible shopper was me. But I’m certainly not the only one. The failure of customers to negotiate prices, not only at places like farmer’s markets but also retail stores such as Best Buy, which have been known to accept competitor’s prices, can cost us hundreds of dollars a year. So don’t be afraid to stand up for yourself. And if you’re in the market for a can of paint, I hope you can learn from my mistake.

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Amazon’s 3rd-generation Kindle e-reader, set to be released on August 27th, had me worried for a little while. My gadget-y friends and I often wonder aloud about upcoming features and technology advances, and many of them assumed Amazon would try to make it more like an iPad. As a happy owner of a 2nd-generation Kindle, I figured that would be a mistake.

The Kindle is for reading books, and the iPad is a tablet computer. Yes, there is a web browser on the Kindle, but it’s clunkiness relegates it to “emergency browser” status. So, I was scared that Amazon might feel compelled to try to add color to the Kindle, or more applications, or a touch screen, or any number of features that would make it less of a device for reading books. Thankfully, they haven’t.

Instead, they focused on improving the reading-in-sunlight situation, speeding up the page-turning time (which doesn’t currently seem slow to me, it’s always turned pages faster than I would with a paper book), making it lighter and sleeker and introducing crisper fonts. There is a mention of a WebKit-based browser, same as on the iOS devices, but they even went so far as to point out that it’s experimental. Amazon seems committed to making an excellent book reader, and limiting its features so that it does one thing really well, much like Apple started taking over when it committed to making an ideal MP3 player.

In doing so, and by keeping the price of the new device the same or lower than the old device, Amazon is taking the right page out of Apple’s playbook, while simultaneously refusing to compete with their products. That all seems incredibly smart to me. The only thing they haven’t done is created an intensely compelling reason for current Kindle owners to upgrade. The 2nd-gen Kindle is already kind of perfect, and though 1st-gen owners might be tempted, I don’t think they’d feel a need to upgrade, the way I felt a need to upgrade from the iPhone 3G to the iPhone 4.

I doubt that bothers Amazon. The Kindle apparently has been added to the most Wish Lists, been given as a gift more than anything else, and has the most 5-star reviews of any product that Amazon sells, and Amazon sells iPods.

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