The Hidden Art of Profit (Caveat Emptor)
Joe M posted in homelife, opinion on October 2nd, 2008
Whether shopping around town or on the web, most of us have gained an awareness that sellers and retailers have become quite crafty at generating a profit.
With an ever-changing economy, it’s probably going to become even more intense.
How do you cover your bases, as a consumer, to make sure you get the best deal, with the least amount of financial exposure?
Here is a list of hidden profits strategies I have observed over the past few years:
Rebates – Even though some class action lawsuits have made progress in consumer rights, rebates are still alive and well. If you take into consideration that many people, if not most, fail at meeting all the requirements in receiving rebates, the picture becomes a little more clear. This is true if you are shopping online, or inside a retail store. Read the fine print in the mailer or website. Look for any * or footnotes describing details of the offer. Sometimes the devil is in the details.
Loaded Pricing Models – Many retailers offer great deals on individual items, while making up for the lost profit on other items. I saw a laptop on sale for what seemed to be a great price. When I looked into it in more detail, I found out that the great price did not include the power supply, the case or any other accessories. Many electronics retailers offer great deals on peripherals, while making up for profits on cables and other supplies.
This may also be true in non-electronics retailers. You’ll find some great deals on certain items, but upon closer examination, you discover that some of the other items in your basket actually cost a little more than the competitor’s.
Bait and switch – Somewhere I read that the traditional “Bait and Switch” tactic is illegal. That does not mean that it does not happen. A traditional “Bait and Switch” tactic was to advertise a product that was out of stock, or low in stock. When the consumer went to the store to buy the item, the sales person would inform them that the item was sold out. The sales person would then lead them to the alternative, which was not on sale. That’s the old style. Since then, stores have to issue rain checks or substitutions, for the most part.
A few months back, I needed a small tool, of a particular size. I went to a major retailer and found that the particular item that I needed was out of stock, yet, a complete kit of all different sizes of the tool was in stock. It was quite a bit more money. The interesting thing was, the tool, in different sizes was about $3 to $8 per tool for each individual size. The complete kit was $35. Strange as it was, the individual tools, all different sizes, were ALL out of stock. The tools were never advertised, so I doubt that it could be conscrued as false advertising. I went to another branch in a nearby location, and found similar circumstances.
Shipping or Delivery Fees – Many times, you might come across what seems to be a great deal on a particular product. You complete the online checkout, only to find that the shipping charges seem to be a little high. Be advised, that sites or individuals can set their own charges for shipping. They are not set in stone, and not necessarily passed on directly to the consumer for what the retailer or seller gets charged by the carrier.
Restocking and Retun Fees – If you return an item to a retailer, many times they will charge a restocking or return fee. This can be as little as one to five percent, or as much as 30% of the cost of the item in certain cases. You may also get stuck with the cost of shipping the item back to the retailer.
Installation – Due to the fact that many people are scared of technology, many stores will offer in-home installation by someone from the store. Usually this is $200 to $500 added to the cost. This is not always a bad deal, for someone that is completey frightened by technology or cables.
Extended Warranties – These are a way in which to add more profit to the bottom line for the retailer. These also, can be a good deal, provided that you are comfortable and aware of all the terms. Ask the hard questions. “If I drop it…?” or, “If lightning strikes it…”
Unexpected Additional Items – This is usually more common with a service provider. You agree to a service plan at one rate, only to discover that there are additional charges for each facet of service. This is one instance in which it pays to read reviews and complaints from existing customers. It literally pays to ask questions.
Package Deals – I had a conversation with a friend of mine, recently. He had taken a package deal from his cable provider for TV, internet and phone service. Sounded like a good deal. A couple of days later, he called me to ask about his slow internet. To make a long story short, the offer that he got at the time only included a 256 KB connection. Everyone else was getting a 1.5 MB deal on the unpackaged plan, which was roughly about 6 times faster. By the time he finished negotiating, he was doing little to save money by buying the package, considering the addtional charges.
This is not to say that all retailers encourage these practices, but it does give you food for thought, and possibly raise your awareness, when shopping in person and online.
The rule of thumb I follow, is: If it’s questionable or hard to understand, it’s probably not a good deal.
Check out Macho Hints On Bargain Hunting for my other observations and recommendations.
October 2nd, 2008 at 2:40 am
Good writing. Keep up the good work. I just added your RSS feed my Google News Reader..
Matt Hanson