Tuesday, July 4, 2017

Price Versus Price-Off

People tend to look at discounts rather than the remaining price.

"I saved $10!" a friend crows.   But of course, the "savings" was the amount deducted off a mythical "retail list price" not money deposited to her 401(k).  As I have noted before, there are two meanings of the word "savings" and one of them is flat-out wrong, but the one people use the most.   When you buy something "on sale" you are not "saving money".   When you deposit money into a savings account or investment account, that is saving money.

But guess who wants you to use the former definition?  Yes, retailers and others who are working against your best interests.  What got me started on this was a price tag on a bag of rolls from Wal-Mart that had the price in a small font, but the "discount" in a larger font.   "You save $1.25!" it crowed, and yes, it was cheaper than the adjacent bag of rolls as it had an expiration date that was fast approaching.

I bought this to Mark's attention and of course an argument ensued.   He thought I was personally attacking him, when all I was trying to do is point out how marketing types use "Price-Off" to get us to buy, while at the same time, making the actual price seem less relevant.  It is like how the car dealers tout "$10,000 off!" a new pickup truck, but don't talk about the actual price.    Frankly, $10,000 should be enough to buy a decent secondhand truck, right?   You can only imagine how high the retail price must be.

And yes, of course, if you are buying something and see a lower price you should get the lower price item.  That goes without saying.   But don't be drawn in to buying something you had no intention of buying in the first place because it is "marked down".

Wal-Mart is king of this.  They have "mark-down" sections, usually in the back of the hardware department along that back wall or a side aisle.   They take all the broken, discontinued, and returned junk and mark it down by a pitiful amount.   A broken sprinkler head, marked down 10% - is this a bargain?   Lowes is also bad at this, putting racks of utter junk in the main aisles and making token markdowns.   A piece of a light fixture missing the glass globe (that you will never be able to find) that costs more than a new fixture in an adjacent aisle.  But it's marked down!  It must be a bargain!

They must know what they are doing, as people will latch onto things as being "bargains" when they are not really bargains, as they are things they had no intention of buying in the first place.   And I say this as I am a sucker for "discounted" items myself - although lately I spend a lot of time looking and not a lot of time buying.

For example, the Wal-Mart Ghetto Gourmet, has an end-cap display of "discounted" items, sometimes beer and wine, or hot sauce or other packaged goods.  Some are near their expiry dates, others are discontinued items or slow-sellers.   And like a moth to the flame, I am drawn to this display.  Bargains!  Discounts!  Free Stuff!   But of course, it is not.   These are items I had no intention of buying in the first place at any price, so there are no "savings" in buying them.  And often they are more expensive items that have been marked-down to a price that is still higher than an economy brand of the same item.    A six-pack of nearly expired micro-brew that is 10% off is no bargain, if you can buy your favorite brand for about half the price.

But sometimes it is instructive to cruise the "closeout" aisle in stores and look as these "bargains" and dissect what is really going on.   They are counting on people impulse-purchasing a mis-matched set of curtain rings (Lowes) or taped-together package of sheets (Wal-Mart) or a water-stained expired 12-pack of beer (Ghetto Gourmet) simply because they put an orange or yellow "discount" sticker on it.   They unload merchandise that they ordinarily could not give away at a price very close to retail.  Very, very, very clever marketing!

And they do this by pushing the Price-Off over the actual Price.