Sunday, December 10, 2023

Too Many Offers, Coupons, Sales, Discounts, Upgrades, Rebates!

Retailers are offering inducements to spend.  Maybe they should just lower prices, instead?

I noted before that it seems like my inbox is flooded with "offers" these days.  Every merchant I have ever done business with is sending me discount offers, coupon codes, rebate offers, and other inducements to spend.  Some of these are merchants I have done business with this year.  Others are merchants I haven't heard from in years - but suddenly are my new friend!  Maybe this price-gouging thing isn't working out anymore?  Just a guess.

But rather than induce me to spend, it makes me pull back.  We get lots and lots of brochures from cruise lines - we have been on three in our lifetime.  Each is offering fantastic "deals" like "50% off, free stateroom!" which makes me think their retail pricing is like the price on a GM car back in the 1960's - a mere suggestion or placeholder.

Speaking of which, I saw a video online the other day - a dealer training film.  Seems the government (boo! hiss!) mandated that carmakers put sticker prices on their cars.  What would the salesmen do?  How can they convince a buyer to buy a car if the price is printed right on it?  Of course, like anything else, the commercial interests find ways to subvert government regulations.  The manufacturers padded the "suggested retail price" on the sticker, so the salesman can offer "discounts" off that price.  Look how much you are saving!  But in fact, you are not saving anything.

I digress, but it reminds me of how the cable companies reacted when Congress passed a law requiring that cable companies offer a basic tier service for $30 a month.  They lobbied hard against it and lost. But rather than admit defeat, they just offered nothing but crappy shopping channels and off-the-air television on the "poverty tier."   And the upper tiers?  They raised the prices by $30 and called it a "government mandated price increase."   Cable billing and cellular contracts - two very opaque pricing schemes - which is why I refuse to engage with either.  Taxes, access fees, fee-fees, and we-just-want-more-money fees are extra!

In shopping for appliances (which may wait until the new year at this point - or wait until they break) we see the same deal.  "Black Friday Savings!"  "Rebate Debit Card!  Buy one appliance, get $50 back, buy two, get $100 back!" and so on and so forth.  The problem with these "deals" is that they tend to make me think no matter how clever I am in chasing them, I still paid too much.   When prices are all over the board, it is hard to perceive the real price.

And that is the point.

With regard to the cruise lines, a simple way to figure out the real price is to take their "sale" price and add a zero to it.  The $299 cruise to the Bahamas will cost you $2999 when it is all said and done.  $299 is the per person charge, not including taxes and port fees and other fees (fuel surcharge?  really?).  So right off the bat, you are close to $1000 the day you make the reservation.  Factor in your airfare, parking, overnight stay in a hotel (cruise ship leave early, and if your flight is late, you'll miss the boat, quite literally).  Then there are onboard expenses - your drinks, dining in the extra-cost restaurants (when you get tired of the trough-feeding at the buffet).  Then there are shore excursions which are mostly extra-cost.  Pretty soon, well, you have gone from $299 to $2999.  That has been my experience.

So they use these come-on prices and offers of 50% off (or other staggering numbers) while claiming the ships are full all the time.   Maybe they are lying about that last part.  The cruise lines are like builders - each racing to get that last customer for their new townhome development, before the market goes South.   Each cruise line is launching yet another "mega-ship" with 7,000 passengers and 2,000 crew.  You gotta fill those staterooms somehow!

I digress, but having been on the Hubris of the Seas, I don't recommend any cruise on a ship that has thousands upon thousands of passengers.  It is not a pleasant experience.

I guess the other side of this plethora of sales and discounts is the nagging feeling that if I wait a little longer, the price might actually go lower.  And if that happens, well, I would feel like a fool for buying now.  This is, of course, the opposite of economic theory with regard to inflation.  Economists tell us that as consumers, when we see prices going up, we think, "better buy now, before prices go up further!" - which is the epitaph of many an underwater homeowner.

Maybe that is true - maybe consumers really think about the direction of prices and then make decisions that way.  I doubt it though - have you looked around you?  People are idiots.  And quite frankly, when I see prices going up, my thought is to spend less, not more.  But maybe I am an outlier.

Living Stingy tip 'o the day:  I went to Jacksonville to pick up our camper on a recall campaign (window broke).  I stopped at a chicken chain for lunch and ordered just the chicken sandwich.  That sort of freaked out the server.  "You don't want the bargain supersized value meal with fried potato chunks and a high-fructose corn syrup type-II diabetes nightmare?"  No, no thank you.  Today's fast-food sandwiches are so huge they are more than enough for one person for lunch, and I always carry my cheap-ass Walmart stainless steel mug with icewater in it.  Of course, I could have saved even more if I threw together a sandwich at home to take with me.  Lesson learned.

But you see, that's me.  When I see prices at "fast food" restaurants skyrocketing, I order less, or order not at all.  Others merely grouse about paying $15 for a "value meal" and put it on their credit card and try not to think about it.

But getting back to economic theory, if inflation causes consumers to pull the trigger on spending (which I doubt) then maybe offering all these sales and discounts and coupons and such does the opposite.  If they are offering lower prices, what is the inducement to "spend now or be priced out of the market forever!"   The coupon deal of today will be replaced by the coupon deal of tomorrow.  Indeed, the "rebate" offer from KitchenAid expires on December 31st, only to be replaced by a nearly identical offer on January 1st.  So why buy now?

That is the conundrum of discounts and promotions.