Coupon
Fever!
The Budget Doctor’s Advice on Prepaid Deals
American entrepreneurs never seem to run out of ideas. The latest fad in technology
is the emailed offer for a product or service at a large discount. Groupon is the
market leader in this field but Deal Chicken, Living Social and many others also
supply a never-ending stream of offers for facials and tacos
Large discounts are wonderful and it can be exciting to realize that you need a
haircut just as you get an offer for a haircut at 50% of the regular price. Of course
to find that great deal you need, you will likely have to look at 50 deals you don't
need. That certainly wastes a bit of time
Another danger in sorting through 50 deals you don't need is that you might be
tempted to buy some of them. Tickets to a play or concert you didn't plan to attend
may look attractive with a 50% discount. A 50% discount at a restaurant may look
almost as cheap as eating at home. And who wouldn't want to splurge just a bit for
a (choose one) massage/teeth whitening/liposuction/tanning session?
The fact is, this entire scheme fails if people only buy things they would have
bought anyway. If you try a new barber because of the deal, the barber is probably
happy to give you a cheap haircut for the chance of getting a new customer. If you
go to your regular barber and pay $6 for a $12 haircut, your barber probably just
lost $9 (the deal coupon people get a cut of the $6). There won't be many deals
if new customers don't show up and if people don't buy things they hadn't already
planned to buy.
Here is the Budget Doctor's prescription for dealing with email deals:
- Ignore any deals that you don't already plan to use.
A paint
ball party may be great but only if you were already planning a party.
- Read the fine print.
A restaurant offer that can't be used
for specials will probably save you nothing and an expiration date before you can
use the offer makes it worthless.
- Check the location.
If you have to drive 30 miles to use
the deal, you may spend more on gas than you save on the deal.
- Make sure to schedule the deal.
If you forget to use the
deal you have lost the entire cost. There are usually no extensions or refunds on
deals so you must plan on when to use it as soon as you buy it.
- Don't spend more than the coupon value.
The trick is save
money, not spend more. A $20 coupon for a meal should represent a challenge to spend
exactly $20 and to not spend $24. You will still save if you only spend $19.
When you sign up for coupon deals you are inviting temptation. You are likely to
make at least one mistake and experience the remorse of a bad deal.
But you may also have feelings of regret when you don't act on a deal. Many of
the coupon deals "time out" and disappear quickly. The entire gimmick of the daily
deal is to encourage impulse buying by appealing to greed (getting something for
very little) and fear (I might miss a great deal). And if consumers don't give in
to those feelings and buy on impulse, the companies won't sell very much and the
entire industry will quickly disappear.
If you
think carefully about every deal you may miss an opportunity to buy, but consumers
should always think carefully before buying.