When is a sale really a good deal? Is 25% off designer jeans a steal or a rip-off? Knowing how to spot the best deals isn't just about having a high-value coupon. It's about knowing the average markup of specific items and learning how to avoid the temptations of going to the store for one item and leaving with 20 things (that you don't really need).
Finding the Best Deals on Groceries
Grocery stores are well known for their colorful weekly advertising flyers touting 'hot deals' on a variety of items. But how do you know if it's really a deal, or if it's just a colorful, large-print repeat of last week's price?
The first thing to keep in mind is that supermarkets, like all merchants, will sell items to you at a higher price than they receive it. This markup varies for different products, but averages about 33%. Of course, this markup goes to pay for employee salaries, spoilage, rent, and all kinds of other overhead. A grocery store may only profit 1 to 2% after expenses and taxes.
Spotting Grocery Deals
Look for a discount of at least 25% before you consider a grocery sale to be an amazing deal. You can also look for buy one, get one free deals. These can be a great way to stock up on needed items.
It can be difficult to know when a price on a grocery item is likely to drop. You can expect for seasonal items to be priced lower when they are in demand, such as green beans and cream of mushroom soup around Thanksgiving, for instance. Sometimes grocery stores will run a seasonal 'buy a ham, get a free turkey' or similar deal around the holidays, which can help you save on big purchases to feed guests around.
Another way to spot a deal is by watching your receipt from week to week and noting what the normal prices are on items you usually buy. Then, when an item is marked as a special, you'll know if it's actually lower than the average that you are used to paying.
When an item has an incredible discount, it may be a loss leader, which is a product sold at an actual loss in order to attract customers into a store. Grocery stores often assume that you'll enter their store to buy the amazing deal on the loss leader and that you won't then leave to go find a better deal on related items, such as bread, canned goods, and bakery items.
As a result, they can get you into the store and then employ various retail shopping techniques to get you to spend more than you intended. To avoid this, try 'playing Santa' - that is, make your list, check it twice, and then stick to it!!
Spotting the Best Deals on Clothing
Just because a retailer is advertising sale prices on certain apparel items doesn't necessarily mean that you're getting a great deal.
Unlike grocery, clothing stores have historically had a very simple markup system - they priced things at twice the wholesale cost, which is called "keystone markup." However, as Cloven Footware owner Matthew Carrol Carrol notes in a Forbes.com article, the approach to pricing is becoming more complex as computer systems allow retailers to quickly and efficiently gain additional insights into specific markets, demand for individual items, and seasonal buying patterns.
Additionally, there is a lot of competition among retailers today, which puts pressure on them to offer 'great deals' on a regular basis. As a result, many mark items up at 2.1 to 2.4 times the wholesale cost to be able to run the frequent sales that consumers now expect. Therefore, sales offering 10 to 15% off of clothing doesn't constitute a truly good deal. However, discounts of 30 to 50% or 'buy two, get one free' style deals can be a real bargain.
Falling Apparel Prices
There are clues as to when clothes prices are about to drop. Clothes from the previous season are almost always put on clearance as the new season arrives. In addition, if the store receives shipments on a certain day of the week, the previous week's inventory may go on sale the day shipments arrive.
The way to get a truly great deal on clothes is to shop in the off-season, buy secondhand, and pay attention to the best times to buy specific items. For instance, it's best to buy jeans in October, after the back-to-school sales have ended.
Getting the Best Deal on a Car
Many people hate car shopping. More specifically, they hate car shopping at a dealership. In a 2015 Accenture survey, 75% of consumers said they would consider completing their entire car-buying process online, including paperwork, financing, and delivery.
Shopping for a car can be frustrating, confusing, and complex. However, once you understand car markups and sales cycles, it gets much easier. New cars tend to be marked up 5% or less over invoice, depending on demand. A used car can be marked up quite a bit more.
The 'wholesale' price is based on the amount paid or given in trade-in value, plus the amount the dealer paid to repair and clean the car. Generally, dealers build enough room in the price to give a buyer a sizeable discount on the sticker price while still making a great profit.
Insider tips from a veteran car dealer can shed light on how to get the best deal on a car. Consider:
- The salesperson's number one job is to get you to finance through the dealership. If you plan to pay cash or finance in another way, don't say so until the price is already agreed upon.
- If you come in insisting on an unreasonable price, a dealership may just send you away. They won't put time into trying to make deals they know they can't sustain.
Car prices are lower at certain times. If you're buying a new car, late summer or early fall is best time to get a great deal . This is when the next model year is coming in and dealers need to sell off the current model year to make room.
You can also get a good deal on a car by observing the "end of" rule. The end of the day, end of the month, and end of the quarter are all times that salespeople are looking to close deals and make quotas. As a result, these can be great times to get the best deal on a car.
Getting Great Deals on Other Items
Many times, simply using good shopping strategies can lead to great deals. Compare prices at various retailers and online stores, look for coupons and manufacturer's rebates, and seek ways to gain additional incentives or free shipping.
Along with basic strategies, it's helpful to know the best time of year to buy basically anything. Some highlights from Lifehacker's comprehensive list include:
- Cell phones and televisions often have the best prices in February.
- Furniture and home décor tend to be priced lowest in July.
- Appliances have the best deals in September, October, and November.
Make Sure the Deal Makes Sense for You
When you're looking to spot the very best deals, make sure that you factor in more than simple price. Is it worthwhile to spend all day Saturday and drive 50 miles to save a few dollars by going to five different stores? Probably not.
Finding the best deals that really make sense for your life often involves finding places with generally good prices for frequent purchases, and then going through a more complex process for big ticket items and occasional purchases. Keep that in mind as you plan your deal hunting strategy!