Wednesday, March 27, 2013

Good Deals for the Taking

I love to get a good deal. What most people don't realize is there is a lot of work involved to get a good deal. You may think that you are getting a good deal, but unless you have done your research, you probably just got what looks like a good price.

So how do I get good deals? First, I have to identify what is worth getting a good deal on. Milk may be $2.99 at WalMart but only $2.29 at Aldi. With that kind of minimal price difference, I am not going to go out of my way just to save 70 cents. It may be more in gas just to get there (although where I live right now, Aldi's is right next to Walmart). On the other hand, a quality dining room set may be $1200. If I can find something equivalent for $800 or less, then I have found a good deal. Finding a good deal starts with knowing what is worth looking for the good deals.

Second, you need to figure out what a reasonable price is and what you are willing to spend. These can be two separate things. For instance, $500 for an iPhone is reasonable. On the other hand, I am not willing to spend more than $200 since I wouldn't use it enough. Hence, I don't have a iPhone. Reasonable prices can be found by shopping (not buying). Stores, internet, and classified ads can all give you an idea of what things are selling for. The key here is to remember to factor in all of the costs (shipping and taxes). After seeing what a reasonable price for something is, it is now time to do the emotional decision and decide what you are willing to pay.  It is important to set your price limit before you start looking for the good deal.

Third, the fun part begins - finding the good deal. This phase could take a day or years, depending on what you found in step two above. A good deal should be at least 25% less than what you are willing to pay (which hopefully is less than a reasonable amount). A lot of people stop when they find something less than their reasonable price and buy it then (even if it is only a few percent). Really, you should hold out for the good deal. Patience is key. While you made an emotional decision about what you are willing to pay, at this point emotion should no longer be a part of your decision. If the price isn't at least 25% less than your reasonable price, it's not a good deal.

Some may say that I am being stingy by trying to get such a low price. Actually, I am doing a net benefit to the economy. For one, by spending less money on each item, I am able to buy more, thereby spreading my dollars to more establishments. Second, a lot of the good deals happen on closeouts/inventory reductions/slightly damaged/etc. By me buying them, I am helping to clear out their inventory and giving merchants the chance to stock newer items. By me not buying more expensive items, I am allowing the supply to be available for those who just have to have the item at any price.

One of the great things about getting a good deal is you get to hear more sales pitches than ever before. I love salesmen, they have a job to do and their goal (in spite of what they may tell you) is to get you to buy as much as possible. Because of this it is always funny about some of the things that are told to you to "close the sale." I should start recording sales pitches to share some of the ridiculousness that is heard.  Let me share some of them:

When we were shopping for a piano, the music store salesman told us that they were the "17th largest music store in the nation." I guess if you are in the 148th largest city in America, then this might mean something. Honestly, how "big" you are doesn't matter. What matters to me is price. I don't shop at WalMart because they are the largest retailer in the nation. I shop there because they have the right price for the things my family buys.

In looking for a hotel I am amazed that the rooms will be advertised with such amenities as a hairdryer or marble sink. 20 years ago, the major draw to motels (based on their advertising) was free HBO. The other thing that I laugh at is seeing them "brag" about their 250 thread count sheets or even 350 thread count sheets. I'm sorry, at home I sleep on 650 thread count sheets (and I don't want to go back to anything less - I splurged one year for our anniversary). If your business is going to brag about something, be sure that it is worth bragging about.

The last part of finding a good deal is to make sure you check the non-traditional places. Ebay & Craigslist are great resources. I once sold a pool table on Ebay for $350. It came with the house I bought and was really worthless to me. The person that bought it probably would have paid $600-$1000 for a new one. He got a good deal. I got it out of my house. Both of us were happy with the transaction. Another place my wife and I have found good deals is at Aldi's. We bought a breakfast nook (seats 6) for $170 (we had budgeted $700). I found out it is renamed from another company's brand which sells it under their label in department stores for $450-650.  That breakfast nook has served us well for more than 5 years and still is going strong.

Shopping just to shop, I can't stand. Finding good deals while shopping I can handle.

1 comment:

  1. "The most important single central fact about a free market is that no exchange takes place unless both parties benefit." -- Milton Friedman