When you go shopping, do you ever wonder how things are priced? Maybe you've noticed the same item can sell for a different price at different stores. Or you've wondered how flat panel TVs have dropped from thousands of dollars to hundreds of dollars in a very short period of time. Jean talks with writer Wilson Rothman about his article in the April 2007 issue of Money
magazine, "The Weird Science of Pricing: Seven Lessons in Why Things Cost What They Do, and How to Use That Knowledge to Get a Better Deal." Wilson shares what the average consumer should know about the ins and outs of pricing:
- The list price on anything is just the opening offer, Wilson says. Also known as the Manufacturer's Suggested Retail Price (MSRP), it's the most that a retailer should charge, and a limit that is set by the manufacturer. Use this to your advantage by comparison shopping—Wilson says you can even ask one store to honor a lower price that you spot somewhere else.
- Be aware of a product's life cycle. Wilson says the minute something goes on the shelf is not the best time to buy—wait a few months and you'll see some significant price drops.
- Know the difference between a "freshness date" and an "expiration date." A freshness date may just be a marketing ploy to get you to buy more of the product, Wilson says, but do pay attention to the expiration date.
- Be wary of things that you don't shop for all the time, like mattresses or major appliances. These are the things that are more likely to draw you into overpaying, because you are probably less familiar with the pricing and haven't been watching the product's price for an extended period of time, Wilson says.
- To find the best pricing on something that can be purchased from multiple retailers, Wilson says a comparison shopping search engine should be your first stop.
- Bundling can lead to paying more, because you often wind up with things that you don't want or need. Don't get sucked into a package deal without looking at all the components, Wilson says.
- Wilson says 99¢ is a hot number in pricing—marketers have found that because we read from left to right, people's minds are more attracted to a price of $2.99 than $3.00.