Dishonest pricing practices

A recent article on Komo uncovered dishonest pricing strategies by Kohl's.  Apparently, Kohl's has been raising prices before placing items on sale.  While you're still getting a discount from the original price, the savings are inflated.  Many readers commented about similar prices at grocery stores and other clothing retailers.  I though it was common knowledge that these sorts of practices are used everyday but apparently some are still quite surprised by these findings. 

It's all a mind game.  Companies spend millions on pricing strategies.  That's why colleges offer degrees in marketing, advertising and supermarket science.  What it really comes down to is the intelligence of the consumer.  Sales encourage impulsive behavior. 

So many people fall victim to these sales traps:

1.  "It's such a great deal, it would be a shame to let this go.  What if I need it someday."
2. " This must be a good deal if it's on sale.  I don't need to compare."
3.  "I must buy this now before the sale ends.  I can't afford to take time thinking about it."

I imagine stores are getting more creative and dishonest as cellphone technology emerges.  A simple bar code scan or amazon search often tells you if the product is a good deal or not.  Furthermore, that cheaper priced product is a click away. 

To avoid these traps:

1.  Think about it.  If you still want it in 24-48 hours, it might be worth it.
2.  What is the genuine value of this product?  Think about what you would pay before even checking the price.
3.  Will you genuinely use this product?
4.  Do you need this product right now?  Can it wait?  How will it impact your current cash flow?
5.  How else might you use the money you're spending on this sale item?  Do you really NEED it?
Emotional buying is rarely a good idea.  Putting it on your credit card is never a sale... it's usually 15% more expensive.

We all know credit cards use the same games to encourage spending and debt building.  So many people, sometimes myself as much as I hate to admit it, brag about the miles they're racking up by using their credit card.  Other companies offer rebates, points, etc.  My husband and I used to buy into this strategy, paying off our credit card every month.  The problem started when unexpected expenses hit us one month and we weren't able to pay off the entire balance that month.  Debt builds quickly and before you realize it, it gets out of control.  Most of the time, using a debit card will offer many of the rewards that a credit card will.  There are some situations that a credit card MIGHT make sense.  A call to your credit card provider will help clear these up.

1.  Does your credit card offer extended warranty protection?
I've taken advantage of this service 3 different times and have been very glad to have it.

2.  Booking a hotel or car?  Does the rental company deduct additional funds to cover accidents, cancellations or other unforeseen events? 
I've heard of more than one person having their debit card frozen by a rental car company.

3.  Are you purchasing from someone you fear might take advantage of you? 
The simple answer is to not make the purchase.  If it's unavoidable, a credit card might give you recourse if you are the victim of fraud.

4.  Will you be reimbursed before your bill is due?

It's very easy to become obsessed with saving money, budgeting and debt pay-off.  While it's important to plan for these things and be responsible, it's also important not to obsess.  Idolizing material goods or money is sinful.  Idolizing your debt pay-off strategies and budgets is also sinful.  Remember balance in everything you do.