Deconstructing the Deal
What are the essential components of every good deal? What methods work time and time again to ensure that you pay less for item X? There are dozens of ways to define and score a good deal, and people usually stick with their tried-and-true methods year after year when making purchases large and small. But what exactly are the components of a good deal? Which methods are we overusing and which ones are we ignoring? Is it possible to ‘deconstruct’ a good deal and apply the principles each time we open our wallets?
After a couple of decades as a self-identified deal-hunter and vocal opponent of paying retail, I’ve identified seven key principles to the killer deal (there may be more — I’m still learning). In rare moments you can hit three or four principles in single purchase, but more often, keeping one or two in mind will go miles toward your bottom line.
Negotiation is the most fundamental principle to keep in mind, but perhaps the hardest to execute. Egos get involved, fear sets in, and cash comes out much too quickly. Learn to identify those occasions when a bit of friendly haggling is acceptable or even expected. Over time, gently push the boundaries to those occasions when haggling isn’t expected — you might be surprised at the results. Bargaining used to be common practice around the world and commercial activity carried a lively component of social interaction with it. Standardization and UPCs seem to have stamped the friendly haggler out of us. Welcome him back.
Shop Around — Sometimes
This one’s tricky and often over-used. Shopping around is great — within reason. If you’re buying new and all other factors are equal, saving $5 on a pair of shoes isn’t a big deal if it took you two hours and a gallon of gas to do it. Research online, look for significant price variances, and don’t get caught in an endless pricing/shopping loop.
Whether you’re buying new or used, seasonality affects price. Winter clothes cost more in winter, summer clothes cost more in summer, and auto prices go up in the spring. Learn to always be on the wrong side of the season (which is the right side for saving money). This means anticipating what you and your family will need in advance and taking advantage of seasonal closeouts as one retail season makes way for the next. Which leads to the next point...
Anyone with kids is well-acquainted with this concept. Anticipating needs six months, a year, or even two years in advance is Thrifty Parenting 101. Because good deals don’t always present themselves conveniently, always ask yourself, “Is this something I will realistically need later on?” and “Could I ever hope to find it at this price again?” But tread carefully: The other, darker side of this coin is the Stock Up and Save fallacy. Just because it’s on sale doesn’t mean it’s a bargain and you should buy 20 cases to store for 10 years. True bargains are sale-priced items that are otherwise never on sale or a single item that you know is a good find anytime and anywhere. Embracing the Stock Up and Save mentality indiscriminately may lead to a feature spot on a popular hoarding show, but not smart spending.
Even the hottest deals are quickly cooled at 17% interest. The very best deals have an immediate, “strike while the iron’s hot” component to them that’s best handled with cash, not credit. Short of that 30-year mortgage or a quickly repaid loan for a once-in-a-lifetime bargain, pay now and pay cash.
I truly love stepping aside and letting someone else pay retail for an item that will eventually be sold second-hand for 75% less. The original purchaser gets the rush of a new item; I get the rush of saving 75%. It’s a win-win. I buy used cars, used furniture, used clothes, and yes (insert drum roll)... even used shoes. The precipitous drop in price from an item defined as “new” to an item re-defined as “used” simply cannot be matched by even the most amazing 4:00 a.m. Black Friday stampede sale.
Bartering for an item or service is right up there with negotiating: It’s a powerful tool, it takes some fortitude to suggest, and everyone hesitates to make the first move. Bartering is easier to apply when you know who you’re buying from and feel comfortable enough to get creative. Maybe you exchange childcare services for snow removal or trade an old laptop for a lawn mower. The beauty and power of bartering lays in its complete "off the commercial grid" nature. You aren’t going to the store, you aren’t paying sales tax, and you aren’t adding more stuff to an already over-stuffed world.
These are the bones of what I’ve learned so-far about getting good deals. As I mentioned, it’s an ongoing, challenging, and dynamic lesson. Some methods are harder than others, and some have become second-nature by now. What are some key principles you keep in your back pocket? What methods do you use to consistently save your family money?