Tightskates and Cheapwads

[the Langolier]

I'm glad to know that I'm not the only Lurker who takes retail gimmicks and uses them against the corporations. So let's discuss.
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Sales, coupons, discounts, etc., are all to the benefit of the corporation. They are just happy they have all of us placated. See below:



Here we have supply and demand for some product that sells normally at a price of P1 which is located at the intersection of the supply and demand curves, which are blue and green, respectively. The shaded yellow region represents the total revenue of said product. Because of the nature of demand, suppliers know that many people are willing to pay more than P1, but in order to sell more products they must charge less.

One method they use in order to gain more revenue and diminish consumer surplus is to put products on "sale" or have coupons, gimmicks, etc. What does this do? Well, on the graph, it lowers the price to P2. As expected by demand, the number of products sold increases. The revenue from the discount is represented by the shaded blue region, which increases the total revenue.

In reality, suppliers have nothing to lose and money to gain with all the "gimmicks". I am quite certain that prices are generally set at higher prices than expected by supply and demand, then brought down to expected levels with sales and the like (varies per industry). On the graph that would look like the shaded blue area on top the yellow portion instead of to the right.

And one thing I always must remind certain friends and family: if you bought it only because it's on sale then it's no bargain.

What it amounts to in the end is exactly what jahcs advises against: more people buy only when it is on sale. No sale = no purchase. Just look down an aile of a gorcery store and see how many of those "special savings" tags line the racks. I will tell you one thing, they aren't there because no one is buying the products they represent.

Anyways, I don't really pay much attention to sale prices, clearance, etc. It is all about what I (or you) am willing to pay for something. For example, I am willing to pay $50 for the 1.00 version of classic Diablo (ones in retail now come without a paper manual and they are v1.08). It won't sell for more than $15. That's as good as a sale to me.

Don't get me wrong - finding something you want at a sale price can never be bad. But what good is practicing coupon-fu if someone can't help but get into credit card debt, or pays each month for a new mercedes for the next three years, or has a TV bigger than is needed, or has enough cell phone minutes to talk continuously for 10 days straight, or...