December 2, 2016

How to Get a Good Deal

woman with black textile

With holiday shopping going on right now and every store advertising their blockbuster deals, writing a blog post about how to get a good deal seems a bit like offering a snowcone to an eskimo. Everyone already knows how to get a good deal, just pop online to your favorite two or three internet stores and compare their prices with your favorite local brick and mortar store. You'll see that one of them is cheaper and ... bam ... just like that you nailed a good deal. Your work is done.

But is your work really done? Did you really get a good deal?

The answer is actually, well, maybe. Some people think this means you didn't check enough stores. What if you check five online stores and three local ones as well, is that enough? What if you throw in the Sunday newspaper? Now is it enough? Well checking more stores isn't the answer. Retailers have become super savvy to promotions and pricing being offered by their competitors. That's why many will do price matching -- they already have the info and have their prices set accordingly. This means that there is little variation on prices between stores. There are occasional loss leaders such as $300 TV's that stores will make available in limited quantities, but generally, their prices are similar. So how do you get a good deal for real?

Let's take a look when retailers can charge the most for their products. If there is a big demand for a product that has limited availability, retailers can charge higher than normal prices. Think about the demand for snow shovels and blowers during a blizzard. People will be willing to pay two times or more because they really need the product.

Here's a snowblower showing as an example. During the summer months when people are dreaming of sunshine and shoveling snow is a distant forgotten memory, the blower was selling for $499. But come fall, as consumers hazily remembered that shovelling snow is not a one time thing, retailers were able to raise the price to almost $579. That's a 16% jump and many parts of the country haven't even seen their first snow yet!

Conversely, retailers have a problem when there is little demand for their product and they have a large supply. Think about swimsuits in the fall. With falling temperatures, retailers are anxious about getting rid of swimsuits since the styles will probably change the following year. This is when you win. When retailers have much more than they can sell, their main option is to lower the price to get rid of inventory. You can see it easily when you look at price graphs.

Below is an example taken from a beach cellphone bag. The bag is water and dustproof, the perfect accessory to keep your cellphone safe when at the beach. Prices were high over half of the summer. Nearing the end of the beach season the retailer must have realized they were sitting on too much inventory. With limited sales until next year, they dropped the price to help move inventory.

So remember this the next time you're looking for a good deal. It's much easier and better to just check the price history.