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The Sale Fallacy – Do You Really Save?

Some people in the world get really excited when things are on sale. “Think of how much money I can save,” they might say. What a deal! But is it really?

The Psychology of Sales

The idea of a sale is simple. Stores try to unload products on you by marking them at a lower price, giving the impression that you are saving money when you purchase it. This is a fairly straight forward marketing technique.

The reason stores put items on sale can vary. At big box retailers like Target and Walmart, the stores will occasionally sell an item at a loss if it will bring a lot of customers into the store. Once you are in the door, you might buy something else that you were not planning on.

Sometimes retailers sell items closer to cost to clear shelf space for new products. These seasonal sales are popular at department stores and clothing retailers that have seasonal stock turnover.

Retailers might tie a sale price to multiple purchases, such as buy one get one free or buy multiple for a discount. Be careful about these, particularly at grocery stores, as you usually do not have to buy multiple products to get the discount. These sales are intended to encourage people to buy more of a product they would already have purchased.

Saving Money?

It is a loungy Sunday morning and you just got the paper (who still gets the paper, right?) from the driveway. You pull out the Target ad and see that your favorite DVD season is on sale this week for $15 down from the regular price of $30. If you hurry to the store today, you can save $15!

But, if you had not seen that sale, would you have bought that DVD series anyway? Would you have waited for a few months and bought it? Is it something you really need anyway? Could you have streamed it from Netflix at no extra cost?

You didn’t really save anything. In fact, the ad just cost you $15 that you would not have spent had the item not been on sale.

Do not be deceived by sale marketing techniques. If you would have really bought the product anyway, more power to you. But if not, you just wasted money on something that you didn’t really want or need before.

Your Experiences

Do you ever get caught up in the sale fallacy? I have to admit that I have on more than one Black Friday. What drew you in? If not, how did you resist? Do you have a friend/relative that you have tried to explain this concept to but failed? Please share your thoughts and experiences in the comments.

Photo by Roland.

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