Smart Money: Used vs. New?
If there’s one thing that fascinates me about money, it’s about how prices fluctuate on things.
Take a cashmere sweater for instance:
Full price: $75
Sale Price: $67.50 (10% off)
Mega Sale Price: $56.25 (25% off)
End of Season Clearance Price: $15 (80% off)
Yard Sale Price: $5
Take a cashmere sweater for instance:
Full price: $75
Sale Price: $67.50 (10% off)
Mega Sale Price: $56.25 (25% off)
End of Season Clearance Price: $15 (80% off)
Yard Sale Price: $5
Now, this is exactly the same item. It took exactly the same amount of labor and materials to produce, the same amount of shipping, packaging, etc. but the price can vary from ridiculously high (I would never pay $75 for a sweater unless it was made of solid gold angel’s wings) to ridiculously low. Up until you get to the yard sale price, this is a brand new, yummy cashmere sweater. Even at the yard sale, it may have been worn only once, or never at all, if it didn’t fit, or was a gift that wasn’t liked.
Typically, I think most of us wait for sale prices #1 or #2. By the time it gets to the clearance rack price, the sweater is definitely seen as less-than-desirable and at that point, the store is willing to take a complete loss on it just to free up the space for newer and more desirable merchandise. Same thing for the yard sale – the person just wants to get a little something out of it, even if it isn’t anywhere near the actual value of the item.
The price is based on two basic things – the desirability of the item vs. the eagerness of the buyer to own it, also known as supply and demand. If it’s at the beginning of the season and the sweater is in a popular color and style, particularly if it’s in a trendy-looking store, some women might think $75 is a very reasonable price for it. Not me, but some women would, especially if it has a fancy designer label.
But I’ll tell you, I’m so much more impressed with someone who got a terrific deal on something, than by someone who spent a ridiculous amount on it! I know they think I’m impressed when they are bragging about their new $200 boots, but inside I’m thinking “sucker!”
It’s even more so with big ticket items like cars and houses. I would never ever consider building a new house. I’ve heard enough nightmare stories about shady contractors and bad home warranties for me to steer way clear of that mess. And you are in a much better bargaining position with a house or a car that’s in good used shape, so you can end up with a much better product than you would have been able to afford if you had bought it brand new.
Just makes good sense. Yeah, you don’t get the new car smell, or the bragging rights, but you do get to brag about what a great deal you worked out with the salesman. I saved my son $3,000 on his first car. I know because another girl had bought it and had to return it, and I saw the original contract in the glove box. Her price was almost exactly $3,000 higher for the car we purchased just two weeks later. Even in this economy, that’s some sharp bargaining.
PS: When buying a car or a house, try to time it for the last few days of the month. These salesmen have monthly competitions with large prizes at stake and sometimes they are willing to work extra hard to give you a good deal if that one sale will put them up into a higher prize bracket.
So when you are shopping for the items you need, whether they are large or small, take a minute and think hard where you could get it at a better price. Be creative and be patient, you may get a heck of a good deal out of it.
By TwitterButtons.com
Typically, I think most of us wait for sale prices #1 or #2. By the time it gets to the clearance rack price, the sweater is definitely seen as less-than-desirable and at that point, the store is willing to take a complete loss on it just to free up the space for newer and more desirable merchandise. Same thing for the yard sale – the person just wants to get a little something out of it, even if it isn’t anywhere near the actual value of the item.
The price is based on two basic things – the desirability of the item vs. the eagerness of the buyer to own it, also known as supply and demand. If it’s at the beginning of the season and the sweater is in a popular color and style, particularly if it’s in a trendy-looking store, some women might think $75 is a very reasonable price for it. Not me, but some women would, especially if it has a fancy designer label.
But I’ll tell you, I’m so much more impressed with someone who got a terrific deal on something, than by someone who spent a ridiculous amount on it! I know they think I’m impressed when they are bragging about their new $200 boots, but inside I’m thinking “sucker!”
This cycle is most noticeable in clothing, but the exact same premise holds true for just about anything else: cars, appliances, furniture, books, movies, or even houses. The price is never set it stone – it’s all about the shiny factor. If you can live without that new car smell or that shiny new appliance, you can get some great deals.
For instance – I never understand why people buy their appliances brand new. Yes, it’s nice to go to the store and have the friendly salesman explain all the features and get the nice warranty (that you will probably never use), but is it worth paying an extra 60%-70%? People move into houses all the time that already have new appliances, so they end up with duplicates. And they sell them dirt cheap because they just want to get them out of there. Since large appliances typically last 10-15 years (we’ve had our fridge for more than 20 years!), you might as well take it off their hands. And you can always get a full warranty at a greatly reduced price through SquareTrade.com. They will put a warranty on just about anything, new or used.
Books, movies, or toys – I almost never buy them at the retail price. Instead I pop straight over to Amazon and see if they’ve got a New or Like New copy at half the price. I don’t think I’ve ever once been disappointed. And with my Amazon Prime membership, I don’t even have to pay shipping.
Books, movies, or toys – I almost never buy them at the retail price. Instead I pop straight over to Amazon and see if they’ve got a New or Like New copy at half the price. I don’t think I’ve ever once been disappointed. And with my Amazon Prime membership, I don’t even have to pay shipping.
It’s even more so with big ticket items like cars and houses. I would never ever consider building a new house. I’ve heard enough nightmare stories about shady contractors and bad home warranties for me to steer way clear of that mess. And you are in a much better bargaining position with a house or a car that’s in good used shape, so you can end up with a much better product than you would have been able to afford if you had bought it brand new.
Just makes good sense. Yeah, you don’t get the new car smell, or the bragging rights, but you do get to brag about what a great deal you worked out with the salesman. I saved my son $3,000 on his first car. I know because another girl had bought it and had to return it, and I saw the original contract in the glove box. Her price was almost exactly $3,000 higher for the car we purchased just two weeks later. Even in this economy, that’s some sharp bargaining.
PS: When buying a car or a house, try to time it for the last few days of the month. These salesmen have monthly competitions with large prizes at stake and sometimes they are willing to work extra hard to give you a good deal if that one sale will put them up into a higher prize bracket.
So when you are shopping for the items you need, whether they are large or small, take a minute and think hard where you could get it at a better price. Be creative and be patient, you may get a heck of a good deal out of it.
By TwitterButtons.com 
2 comments:
Very good tips. I think it is hard for some people to buy used things. But I think that usually it's nothing a little lysol and elbow grease can't fix.
thanks for the tips! Very useful!
iamprew.com
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