Real vs. Artificial Scarcity: How to Build Urgency Without Breaking Trust
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When vacationing a few years ago, I walked past a gallery, and a massive sign in the window declared it was going out of business and all art was “80% off.” I was delighted to discover this great value and bought a few paintings at a considerable discount.
The following year, I passed the same gallery with the same sign. What? I thought. They already went out of business. I took a closer look at the sign. It said: “Going out FOR Business.” I had been duped. All the art was permanently on sale when I thought it was a limited-time offer. These were lower-quality paintings worth the low price I paid.
This gallery employed the common approach of manufacturing scarcity to create a sense of urgency, in this instance, through the illusion of a massive one-time sale.
Intent matters. If our only goal is to make a sale, it’s easy to default to scarcity. If, however, our goal is to satisfy our customers and help them make an informed choice that adds value to their lives and builds a trusting, long-term relationship, we will re-examine whether and how we create scarcity in our business and focus on real constraints when they truly exist.
In part one of this series, we’ll look at the history of scarcity in marketing and the difference between artificial and real scarcity. I’ll also help you evaluate if scarcity tactics are masking structural or strategic business gaps.
In part two of this series, we’ll look at how to utilize real scarcity ethically and successfully, with specific case studies to inspire you.
The History of Scarcity
Scarcity is a psychological trigger rooted in the economic principle of supply and demand. When supply is scarce, demand goes up, which drives prices up. When we feel an item is limited, especially when others want it too, our desire for that item increases.
A study published in the Journal of Personality and Social Psychology in 1975 tested the concept of scarcity by having participants rate the attractiveness and value of two jars of cookies, one containing 10 cookies (an abundant supply) and the other containing two (a scarce supply). The results indicated that cookies in short supply were rated as more desirable than those in abundant supply.
The concept of scarcity as a tool for influencing behavior was popularized by Robert Cialdini in his groundbreaking book, Influence: The Psychology of Persuasion, first published in 1984. Cialdini identified scarcity as one of six mental shortcuts that drive behavior. In his book, he writes, “Opportunities seem more valuable to us when their availability is limited.” When we perceive scarcity, we are motivated to act, and in the context of marketing, to make a purchase.
Over time, marketers embraced and leveraged this behavioral phenomenon to their advantage. In the 1990s, the internet took off, more products and services were sold online, and this tactic became ubiquitous. Creating a perception of scarcity to induce a sense of urgency became an objective, regardless of whether real constraints actually existed.
Today, scarcity tools are commonplace. Website builders and plugins offer pre-built templates that include countdown timers and inventory displays, which aren’t necessarily linked to real data.
Consider the Shopify plugin “Hey!” that lets companies use either real data or “generated data” based on “randomly generated numbers” to populate inventory numbers. This means a customer may see only two left in stock, even if that’s not true.
Real vs. Artificial Scarcity
When companies sense a lull in sales or hesitation from their buyers, they are often told the solution is to create urgency. Indeed, helping a customer overcome indecision inertia can serve their best interest. However, when companies manufacture urgency through the use of inaccurate information, manipulation, arbitrary deadlines, or artificial limitations, they create an artificial scarcity that deceives customers.
Here are a few examples that illustrate the difference between real and artificial scarcity:
Real Scarcity:
Production or supply constraints – When there is an actual limit on the volume that can be sourced or produced. For example: Wine from a specific year’s harvest, or an artist’s paintings who only paints a limited amount each year.
Seasonal or time-bound Availability – These are tied to natural changes in seasons, holidays, or annual rhythms and have cyclical availability. For example, Oktoberfest beer, annual tax preparation services, or poinsettias, which are only available or relevant during a particular time of the year.
Physical space or capacity limitations – These limit the number of people who can access the offering, such as concert tickets, hotel rooms, or restaurant reservations.
Lifecycle transitions or discontinuation – One-time events that are not available again (e.g., retiring an American Girl Doll collection, end of season clearance for items that were overproduced)
Artificial Scarcity:
Countdown timers that automatically rest, inventory claims or customer shopping behavior such as “someone else is interested in this item!” that are not tied to real data
Perpetual sales cycles with similar deals that reset at a regular frequency or a permanent sale such as “80% Off - Going out for Business” as in my gallery example
Arbitrary deadlines with no real reason, e.g., “Loyalty points expire in 1 month”
Manufactured exclusivity, such as “Limited Time offer” or “Only 50 spots available,” when there isn’t any real limit
The Business Case Against Artificial Scarcity
While egregious examples of using fake data may seem an obvious no-no, for more innocuous examples, using artificial scarcity tactics can be tempting. It can lead to short-term sales. Multiple brands have claimed that using countdown timers has doubled or even tripled their sales. But there can be long-term consequences. Using artificial scarcity can:
Erode trust: If you automatically reset timers or your inventory data isn’t real, you break trust and may lose customers.
Delay buying: Customers can become accustomed to perpetual sales and may distrust your pricing or wait for a better sale in the future.
Attract bargain hunters: You want lifetime customers who value your core offering, not one-time buyers seeking a deal.
Buying regret and higher return rates: When customers feel pressured, they may experience buyer’s remorse, leading to more returns and sometimes, negative reviews.
It's also important to note that customers are more savvy than you think. Studies have shown that customers who are familiar with scarcity tactics are less susceptible to their influence.
How To Know If Urgency is the Real Problem
If you find yourself manufacturing urgency and depending on artificial scarcity as a core business tactic, you might have a bigger problem. Take some time to reevaluate whether your core value proposition or messaging are strong enough. Specific questions to reflect on include:
Does my core product/service fulfill a real need for my customer?
Is my messaging compelling? Does it generate interest and action?
Am I targeting the right customers who have the budget, authority, and desire to make this buying decision?
Fundamentally, an excessive reliance on scarcity tactics may indicate that you’re brand foundation isn’t strong. Either you may not be delivering enough value, or you may not be communicating it properly to build trust and encourage sales among the right customers.
As consumers, be wary of the myriad artificial scarcity tactics that are luring you into a sale, especially as the holiday season approaches. The more informed the buyer, the less power these tactics hold.
Stay tuned for part two of this series, where we’ll look at ways to incorporate real scarcity into your business strategy effectively.
