Buyer Beware

Listen. I get it. I like things that are on sale. I buy things that are on sale. But truth be told, I have a great distrust for things that are "on sale". This is because I spent most of my life buying things that are on sale, only to watch these items crash and burn to a fantastic death. Eventually, I realized that there is a cost to almost everything that is “on sale”.

Everybody loves a sale because everybody thinks that a sale is a deal, but everybody is wrong.

It is wrong because there is almost always a non-financial cost to items that are subject to this sort of “sale” pricing.

Things that are on sale are a little less durable. There may be a part that is missing. They usually have less of a warranty or a more-strict return policy (“All sales are final”). What I failed to realize is that these little inconsistencies are the cost of getting something at a lower price.

I bought a climbing harness once. You know what a harness is? It protects you from dying when you are rock climbing. I bought one on sale. And it had an awkward belt buckle that was difficult to put on properly. The harness was still functional, but it was slightly compromised because assuring that it was on properly was more complex than necessary. More complexity = increased chance of putting it on incorrectly = increased chance of dying when I fall. Is increasing the risk of death with an awkward buckle truly worth the $15 I saved on this harness? I think the non-monetary cost (increased risk of death due to slightly-deficient buckle) greatly exceeds the financial cost I saved by buying this item that was on sale. Thus, the item I bought on sale was not a deal. It was a burden.

I started looking at all the other things that I have bought on sale, and they all seem to manifest the same pattern: the amount of money I saved was not worth the non-financial cost that I paid. Another way of putting it: I paid less, but I got less. I got less service, less performance, less functionality, and less value. Conclusion: things that are on sale are usually worth less.

The employees of Nike, Ford, and every other major company understand price and how much something is worth. They apparently have really smart people who analyze both the products and the markets, and since they have been in this “money” business for a few hundred years, they kind of have a good idea about how much something is worth. Also, these are companies that exist in a capitalistic society, and they expect to get money for how much something is worth. They aren’t putting their cars on sale because they are just so generous and nice. It is because they are worth less.

Items that are on sale, 98% of the time, are not a deal. They just cost less because they give you less. That is not a deal. That is a lower cost. But is the lower cost worth the lower value? Usually not. Especially if you are buying a climbing harness that will save your life.

Whenever you buy something, there is an element of risk that you will not get what you paid for, or that it will not function how you hope it will function. Your dream car might not be so dreamy after the four-wheel drive cracks on it the first time you use it (happened). The goal of a savvy shopper is to reduce the risk and to reach a point in which certainty of product “success” reaches almost 95-99%. However, “sale” items greatly reduce this probability. How do I know? Of all the things that I have bought on sale, I estimate that 60-70% of them adequately fulfilled my need. That means that 30-40% of them did not. In my mind, that is an unacceptable rate of failure. The product on sale might look good and the review might sound great, but I know from experience that 30-40% of the products that I buy on sale fail in the same way that my harness failed. If you can accept this rate of failure, why are you even buying this item in the first place? You should just go to Good Will and buy a VERY CHEAP version of that item because it has just as high of a success rate. I bought a sport coat at Good Will for $3, and nobody knew it was from Good Will until I told them. I still own it and wear it to this day. This was a much better deal than searching for a sale on $100-300 sport coats.

I do think that deals exist, and I have found them. However, they usually didn’t come from items that were on sale. Instead of equating a deal with a sale, I would define a “deal” as a situation in which there exists a disparity between cost and value. There are three main sources for a true deal:

1. Generosity -Somebody decides to price something for less than it is worth. This is rare, but it does exist.

2. Ignorance -Somebody doesn’t know how much something is worth. This is common, but unfortunately, this usually doesn’t result in a low price. It results in a high price. Go try to buy a house or a used car, and you’ll know what I mean.

3. Speed -A person does not have the time or desire to do the selling required to get the market value, and so they sell off their items quickly. I once bought a 1972 Chevy Malibu for $2500 from a person who was in a hurry to sell. After giving it a car wash and putting in some time on a website, I sold it for $4500 a month later.

This is my crucial point: When I look for a deal, I do not look for items that are on sale (ok, I still occasionally buy sale items. And they still frequently fail). I look for items (or sellers) who meet any of the three criteria above. This is the best source for a deal, because it will provide you with a product that is not of diminished integrity while still providing it at a good price.

Don’t look for sales. Look for generosity, ignorance, or someone with itchy fingers. They don’t pop up in an advertisement, but they are around. You just need to keep your eyes open.

Garage sale + road bike + a

Garage sale + road bike + a little luck - $20 = a DEAL

Now that, my friend, is the

Now that, my friend, is the TRUTH. Bonus question: which of the three causes of a deal was this an example of?

Generosity on the part of my

Generosity on the part of my brother.
Speed on the part of the seller.
Ignorance on the part of the seller and my brother.

3 bonus points awarded. You

3 bonus points awarded. You also get a strawberry scratch-and-sniff sticker.

What about clearing

What about clearing inventory? For example, a computer that is a year old selling at a reduced rate because it is a year old. It is still highly functional and has no defects [or is just as likey as any other computer]. For 98% of the populations computing needs it will be more than adequate. Why pay more for a non-sale comnputer? Arguably this could fall into the speed [need to sell it before it gets too old] or ignorance [ingnorance to the size of the market] categories. However that would seem to make many, if not most, sales a good deal [two more examples: running shoes and cars]. Maybe you should rethink it along the lines of "always look for sales, but then check for product reviews to make sure the sales item isnt poorly made" or "dont get suckered into buying this years model for full price when you can buy a perfectly good version of last year's for half the price"?

I would definitely agree with

I would definitely agree with the "don't get suckered into buying this years model for full price when you can buy a perfectly good version of last year's for half the price". I personally follow this "cheap" version of living.

But I am still VERY cautious of these "older" models, because I often ponder the question: WHY is this product over-stocked? Most often, it is because the product is lame-o. The climbing harness I bought was an "overstocked" model, and there were many left over because it was not a good product. I have had this same failure occur with a pair of running shoes and with a backpack. I no longer trust these "sale" items. Whenever I see "overstocked", I take that to mean "not many people wanted these things". The fact that the item is "overstocked" is, in and of itself, a very telling "review" of the item. There are some deals out there, but I still think the failure rate is in the 30-40% range with the products that I have purchased.

Back to the cars/shoes example (or even bicycles). This IS an example of somebody looking to sell something quickly. The key thing is to know WHEN this will occur, and to make you sure you are out buying on these days. There is a short window in which the big deals exist, and it is a fine line because there is the balance between waiting for the great deals but also not wanting to be too late. You have to wait for the price to drop, but you can't wait too long or the good stuff will be gone. I once read a quote from a millionaire who said, "I buy my straw hats in the winter." You can get GREAT deals on a straw hat in the winter, but you have to anticipate AND plan for it. "Anticipate" and "plan" rarely get mentioned when talking about things that are "on sale".

Thanks for the comment!

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