`Sale` The Way to Save Money or Spend Double?

Sales and discounts are big part of our daily shopping and saving money process. Does it work like that? Are we the benefit ones? Let’s look at discounts from the different angle.

From the point of view of the firm, our main goal is to make profit. But how to attract customers? How to sell something, that lost its original form and looks a bit battered? One of the answer is to make sales.

Have you ever live the situation where you can get some bonuses just because you are the first customer? (First Ten People who call us will get 20% discount etc.) Or you belong to some group of people (students, seniors etc.) that are lucky to get lower price than others. In economy, we call this price discrimination. Let’s see how it works for firms;

There are a few types of price discrimination: First one is selling goods and services at the highest price people are willing to pay (but in practice it doesn't happened often). Second type is, the more goods or services you buy the less you will pay for each additional one (This is,unfortunately how I am always spending money without thinking about the quality of the product, being under impression of a ”good deal” ,and dispose of it so soon ). And the last one is to charge some group of people less than others. In this case, people who are able to pay, will buy this product. And people who, for some reasons, can’t pay a lot- still will buy. This is combined market.  At this point the firm coming to maximizing consumer surplus which is leading to maximizing its profit.

Do you have at least one discount card? This is one more way that firms are attaching customers. As soon as you've got one, the company becomes the first one you are checking, when you need something.

Starbucks' Advertisement

Another tricks of getting customers attention, is putting an advertisement, that the biggest sales are coming. As a result of big event (birthday of the store or it’s soon closure). Does it always match the reality? I don’t think so…

A few words about seasonal sales. Logically, you can see them at the end of each season. Usually by that time the firm already made all the money from that collection, so it just wants to get rid of remnants. 

And the last category is holiday sales (New Year, Christmas, Eastern etc. depended on country). At this time firms are selling literally everything.  We are seeing lots of special deals, presents etc. And we are buying stuff we wouldn't buy normally and probably we will not even use.

All in all, everyday we see a lot of offers around us and we feel special, waster our money. And what are we getting? Something we REALLY like and need or recurrent trash? Ask it yourself before the next purchase.