When You’re Not Saving Money at That Sale

Sale prices. Who doesn’t like to save money and get big shopping discounts? You walk into your favorite store and see a bright sign above some nice T-shirts: “45% off today only!” You may think to yourself: “That sounds like a good deal; I don’t want to miss out.” But I wouldn’t be so sure.

Unfortunately, sometimes those sale prices aren’t actually saving us money.

Intentional Spending

Being aware of how we spend our money is a big part of intentional living. Our true priorities are reflected in the things we spend money on, and if we’re not making thoughtful choices, we can easily overspend on things that don’t help us achieve meaning and satisfaction. As person of faith, I think how we deal with money and possessions is core to living out our beliefs (see this awesomely relevant talk from a sermon series called Culture Shock).

That’s why I want to take a look at when exactly we are saving money and when we’re essentially falling into a trap.

Some Background

Psychology and marketing are both fascinating subjects to me – that’s why I studied them in college. The difficult truth, though, is that marketers often use their understanding of human psychology to manipulate our purchasing decisions. Here are some of their tactics, which you may already be familiar with:

  • Fear of Missing Out (FOMO) – Preventing a feeling of loss is powerful motivation to act. While the expiration date of a sale is usually arbitrary, marketers make sales sound more fleeting in order to give a sense of urgency to buy. They know we’ll want to avoid missing out – or in this case, feeling the loss of a good deal.
  • Insecurity – In order to get us to feel a need or desire for their product, marketers have to convince us that we are somehow inadequate. If we are content with who we are and what we have, we won’t be motivated to acquire new stuff to make our life “better.”
  • Value in perception – The price of a product is not always based on the cost to make it. By changing the look and feel of the product or the marketing message, marketers can make us perceive a product to have higher quality, be more rare, or be more trendy and desirable. Each of these perceptions make us willing to pay more, regardless of the actual cost to produce it.
  • Bundling – Marketers know that getting us into the store or clicking “buy” is the biggest hurdle. Once we’ve said “yes” to one purchase, it is much easier to get us to say “yes” to other things. That’s why Amazon always suggests other items you might like when you’re about the check out and why grocery stores stock the check out counter with tempting treats. It’s called an “upsell” and it’s very enticing. Similarly, if a sale can get us in a store, they know we’ll see other products and we’ll be more likely to buy more than just the one thing we came in for.

I could go on, but I’ll stop there.

Who Is Really Losing Money On Sales?

Spending Money is Not Saving MoneyWe are made to believe that if we take advantage of sales, we are saving money and the company is making less than they could have if they were selling products at full price.

But companies don’t create sales out of the goodness of their hearts. They have their own best interests in mind.

By having a sale, the company gains more money because:

  • More people come into the store
  • Customers feel more urgency to buy things
  • Sales make products that weren’t selling more attractive
  • The full price was originally marked up so even the sale price is still covering their costs

On the other hand, “taking advantage” of a sale isn’t always to our advantage as consumers.

If we hear about a sale or are out shopping and see a discounted product, and if that motivates us to make a purchase that we weren’t planning to make, then we’ve fallen into the trap. We’re obediently doing exactly what the marketer’s want. We are letting them convince us that we need something that, beforehand, we weren’t even aware existed.

In other words, you are spending more money – money you would not have spent if there was no sale or discount.

The Only Time a Sale Actually Saves You Money

There is one case in which buying at a discount actually saves you money, and that is when you already needed to purchase the product or service before you knew about the sale. “Need” being the key term.

For example, if you need toilet paper for your family every month, and you go to the store to get toilet paper, and it happens to be on sale, then you’re saving money. You would have happily bought the toilet paper at full price, but you got lucky.

But if you went to the store to purchase toilet paper, and you came across a sign that said bread is on sale, and you ended up taking bread home as well, then did you save money? That’s questionable. Why? For one, you were planning to spend $4 on toilet paper, and now you’re spending $7 on toilet paper and bread. $7 is greater than $4, so you are spending more money, not less.

Secondly, if you didn’t really need that bread, it could go to waste. Or maybe you’ll put it in the freezer, except the next time you actually do need bread, you forget about it and buy new, fresh bread. Or you fill up your freezer with frozen bread and other things you don’t have any plans to eat, and then eventually you need a bigger freezer, which costs more money. And the stuff in the freezer expires and goes to waste.

A Quick Recap

To break it down very simply, here’s the rule of thumb.

  • You buy what you need. It happens to be on sale. -> You’ve saved money!
  • You see a sale. You buy something you weren’t planning to buy. -> You have spent more money.

I know for many of you, this concept is utterly straight forward and not in the least bit surprising. But my husband tells me that when he first thought about this, it was quite a revelation to him (he actually blogged about it, too). In most cases, people don’t really think about it, so that’s why I felt I needed to write this.

-M

 

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