Some folks are so enamored with the price. They think a good deal is all about price. I am a recovering price addict. I used to think the lower the price the better. However, I’m coming to realize a good deal can only be found when one factors in both the price and the value of an item.
Consider the following fictional conversation:
Low Price Lover: “I got a great deal on my new bike!”
Person Concerned with Value: “Really? That bike looks like a piece of junk that could break if you sat on it.”
Low Price Lover: “Hey man, don’t dis my bike. Most bikes I looked at cost over a hundred dollars and this one was only $35. I got it for 65% less than every other bike I saw.”
Person Concerned with Value: “You bought $35 worth of junk.”
Admittedly, the conversation over emphasizes the boasting of the ‘low price lover’. However, the point is that any of us can become so enamored by price that we completely neglect to factor in the value or true worth of an item.
A good deal is getting something that has a higher value for a lower than average price.
Chart #I: When Price and Value Move Together: Neither a Good Deal Nor a Bad Deal
In the chart above the black line represents price and the red line shows value. At a minimum, every buyer wants to be sure that as the price increases so does the value. A purchase where price and value are comparable would be neither a good deal nor a bad deal.
When Value Lags behind Price: Bad Deal
In this chart the black line (price) continues to rise, but the red line (value) remains stagnant. This would be categorized as a bad deal. A bad purchase is spending more money and getting less value. If you want some examples of high price and low value items, look in the SkyMall Magazine next time you fly. There are some pretty outrageous prices for some standard items. It is possible to get something for a really low price and still get a bad deal if the value still falls well below the price.
When Price Lags Behind Value: The Good Deal
This is the ultimate ‘good deal’. In this instance you get a good deal because the price (black line) has fallen below the value (red line). In other words, the money you spend is giving you more value per dollar.
What are the best ways to get a good deal?
- Shop Second Hand: Some folks love name brands. When you shop second hand you can get the value without the attached price increase.
- Shop garage sales. Garage sales consist of items that no longer appeal to people. In many cases, the items are still valuable, simply no longer appealing to the original owner. As a result, it is possible to find like new products at garage sales.
- Shop off season. Who wants to buy shorts in September? You do! When you buy off-season you can typically buy items from anywhere between 50-85% off. Now that is a great deal.
- Inform the sales associate. When I bought my last computer I told the sales representative I was looking for a computer. After the associate showed me a few computers I said I was looking for a good deal. He then showed me some items that had been deeply discounted for various reasons.
- Anticipate your needs. The more time you have available to purchase your item, the more likely you are to find a good deal. For example, if you know you will be needing some running shoes, if you have several visits to shop you will be more likely to find a great shoe on sale. If, however, you head out the night before a big race you will be forced to buy whatever is available at that moment regardless of price.
- Look online. Shopping online has its drawbacks. Nevertheless, if you shop online and then visit a physical store you can inform the store of the price online. You might just find that they are willing to match the price.
- Be creative. You can get a great deal if you find a way to share a product or even if you find another item that will satisfy your needs. When buying an item, ask if the store would be willing to throw in something extra.
- Inform friends and associates. If you are on the hunt for an item, just let people around you know. It is amazing the number of times someone has an item they are willing to sell (and even give away) for practically nothing. Take advantage of your networking groups.
- Check out non-traditional shopping outlets. See if Craigslist had the item listed. Find a flea market around.
- Take cash. When purchasing items – especially from individuals – nothing makes them more anxious to make the sale than a flash of cash. They know if they make the sale there will be no hassles or problems with getting paid.
This post was previously published as a guest post at Five Cent Nickel.
What strategies do you use to get a good deal?