You Get A Discount!

The Budget Doctor’s Advice on Discount Shopping

This bit of advice is available to you today at a discount of 70%! It is certainly a $100 value so you can send the $30 at your earliest convenience. Or, you can read it for free. Since this advice is always free, a discount doesn’t mean much and in general a discount doesn’t mean much if you don’t know the value of what you are buying. And, as 50% of economists will tell you, the real value of an item is what someone will pay for it.

There seems to be a trend among large retailers to send out advertisements for products with a 30%, 40% or 50% discount but no mention of the price. The fact that these advertisements apparently generate business is a sign that Americans are terrible shoppers. The advertised discount could be based on a price that is 30%, 40% or 50% more than the product is worth. An ad like this should insult a consumer and no one should waste gasoline going to a store to find out what the price is. That just encourages more of this disrespectful behavior. Of course knowing the price of the item does not guarantee a good deal.The only way to guarantee that a consumer is getting a good deal is to follow

The Budget Doctor’s prescription for getting good value:

1. Know the product you are buying
A PC may cost $250 or $3,500. Either one is likely to let you read email but there should be huge differences in the products that really make them entirely different purchases. A 2006 Kia Sportage should be worth less than an identical 2007 model or 2008 model (but a 1932 Ford is likely to cost more than a 1982 Ford).

2. Know the current price for the product.
Don’t just find a price; find the price at which the item has been sold.You can do research on eBay for many items and other sites also show the price agreed upon for a sale. Remember that prices change and a new model cell phone can mean that the old model just dropped 50% in value.

3. Find a number of sources for the item.
Competition is the backbone of capitalism and you should be suspicious of anyone claiming to be an American who doesn’t comparison shop. Homeland Security may be tracking this behavior.

4. Negotiate the price.
You might not want to spend much time getting a few cents off a quart of milk, but you should always ask for the best price from at least two sellers on any item over $100. And never hesitate to tell one seller that you got a better offer from a competitor.

5. Consider the entire deal.
Do you need a carrying case? A free $40 carrying case may be as valuable as a $40 discount. Do you get a warranty from one dealer that is better than another? You must consider the value of the entire deal and that usually requires paper and pencil.

I seldom shop at outlet stores because I usually can’t find the same merchandise that is offered in department stores at a significant difference in price. I don’t want a $10 shirt for $10; I want a $20 shirt for $10. Too many merchants offer inferior products at a discount without revealing the facts. I do not pay attention to the “suggested retail values” instead of “private party values” on Kelley Blue Book when looking for cars. Value isn’t based on the seller of a product and if you choose to pay more for a car because it came from a dealer or more for a shirt because it has a particular symbol on the pocket, you are making a donation above and beyond the value of a product.

Of course the advice is different if you are the seller. Certainly adding a few hundred dollars to the asking price of a car or a few thousand dollars to the asking price of a home is a time honored tradition. People expect it and if they are wise consumers they will offer you less. If someone agrees to pay you more than your product or service is worth, you should graciously accept the cash and then give them a copy of this paper. For free.