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Is The Discount Worth It?

05 May

2013-05-05 18.52.52

Have you ever watched infomercials on tv?

They offer you a product for $15, then at the end of the show tell you to “act now” to receive double the product and other additional gifts.

Amazing!

I’ve done one of those deals once.  Everything was good except for the phone call.  After 20 minutes of listening to more offers (which I rejected) by the salesperson, they finally let me pay for my order.

I came across a magazine subscription recently.  They said their regular rate was just under $50, but if I purchased at that moment, I would receive a $35 discount, only having to pay $15.

It was a 70% discount!!!

Most of us would be impressed by this.

The problem is that we use the wrong metrics to decide whether something is a good value or not.

For example, the $50 price was a newsstand price.

Question: When is the last time you purchased a magazine subscription from a newsstand?

Just like I thought. Never.

The product is being promoted based off of the appearance of value created by a huge discount.

At what point does a discount prove value?

If the subscription was valued at $1,000 and they sold it for $15 (a 98.5% discount), would it then be worth it?

Here’s the truth: value is determined by the quality of the product and its importance to me.

Nothing else.  The real question is not how much the product was discounted.  The real question is whether the $15 price is the real value to me for that product.  If it is, then I buy it.  If it isn’t, then no.  Discounts have nothing to do with it.

There is only one place where a discount is worth it to me.  If the value of the product to me is $15, and the discount is taken off of that price, then it becomes much more worth it.

This is why my grandpa would go to garage sales (and I got to ride along).  He figured that tennis balls and hats were not worth the prices someone would pay in the stores to get them.  So, he would find the same products, slightly used, for much cheaper.  I’m sure he bugged my grandma with how much junk he brought home, but he LOVED it.

What’s my point?

I don’t really have one.  Be careful how you shop…I guess.

Is that good enough for you?

Have you ever been fooled by discounts on something that still proved to be a bad value?

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