When to Wait for the Price to Drop

By milo on Apr 21, 2010 | 1 Comment

Everyone appreciates a good sale, especially when your favorite items can be had at a discounted price. But is there a way to tell ahead of time when to wait  versus when to splurge? The short answer is yes. Many products go through predictable sales cycles, during which they are almost sure to be found at a discounted price. Some of these cycles are seasonal,  but others are based on the expiration of the product, the competitive landscape or even industry advancement. Because of the variety of  market forces,  various product categories end up on the clearance rack much more often than others. Today we explore which product categories go on sale the most, and why this phenomenon routinely occurs.

Air Conditioners

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A common trend for several of the items on this list is seasonality. Air conditioners are the epitome of a seasonal purchase, and purchasing one always seems most desirable for the few months when the weather is hottest. During the dog days of summer, people flock to the local Home Depot and Sears in droves to purchase the one item that can make the heat bearable. Toward the end of the summer, however, most of the people who wanted to buy an AC have already done so, and those who have resisted see little reason to spend the money so late in the season. Thus, demand for air conditioners plummets from early fall until late spring of the following year, causing air conditioners to have a drastic drop in price for this entire time. This phenomenon is discussed by Jennifer Melnick Carota of TheGiftTherapist: “Common sense prevails in the air-conditioning market, according to Diane Ritchey, editor of Home Appliance magazine. Think about when they’re most in use — May through September. People feel the heat and they start to buy. The stock gets depleted, the demand is higher and so is the price. When cool weather comes around, most people just aren’t into air-conditioner purchasing, so the demand drops, as does the price,” she says. So if you’re starting to feel the heat, grab the sale prices now before May rolls around.

Swimwear

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It isn’t hard to see how pool and beach weather affects demand for swimwear, and it is exactly this seasonality that makes makes the bathing suit an item frequently available at a discounted price. You might imagine that bathing suits are similar to air conditioners and that, during the summer months, when demand is highest, prices would rise accordingly. Many times, however, this is not the case. In order to entice shoppers to buy from them throughout the bathing suit season and to compete with other clothing retailers who also sell swimwear during the summer, many stores offer huge discounts on swimwear all season long. Of course, as summer winds to a close, demand for swimwear sinks dramatically. In order to get rid of all the excess two-pieces and make room for fall fashions, clothing retailers slash prices even further, running huge “end of summer” sales where bathing suits can be had for fractions of their original price. In a way, swimwear is actually on sale more often than it isn’t, so buying a suit at full price is hardly ever worth the cost.

Computers

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Technology outpaces itself at a rate faster than almost any other product category. In order for tech companies to withstand the competition and bring the most bleeding edge capability possible into the marketplace, they need to keep innovation going at a blistering pace. Because of this phenomenon, what’s considered “new and hot” today is sure to be on sale tomorrow. Nowhere is this more apparent than in the computing sector. As chipsets and memory capacities increase, systems built mere months ago can barely keep up with their successors. In order to make room on the shelves for the latest machines, retail outlets need to constantly slash prices on their “old” inventory, which is made up mostly of machines that were hot only a few months back. Computers are also subject to seasonal pricing differences, with late summer seemingly the best time to buy since most retailers run back to school sales at this time. But if you miss the August and September sales, wait a few months until November and December roll around. Computers and laptops are popular gift items for the holiday season, thus the end of the year frequently brings big discounts on items that you’d actually enjoying unwrapping and using.

Prom Dresses

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Every year, millions of high school girls rush out to malls and mom-and-pop dress shops across America to find the perfect dress for their special night. Like for any other item that sees high demand at predictable times of the year (April and May in this case), stores prepare by purchasing ahead of time, sometimes more than they can ultimately sell. When prom season ends and the dresses are no longer being purchased in large quantities, the store is faced with a choice: resolutely continue selling them at high-demand prices, or price them lower ahead of time to get them out the door. Because prom season is so short, these dresses don’t actually end up staying at the full price for very long. As the big dance gets closer, prices start falling–up to and on the actual date of the prom. After all the proms have concluded, dresses can be had for pennies on the dollar, as their sequins and ruffles no longer serve much practical purpose for the rest of the year. This is one instance where procrastinating can really pay off.

Cars

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Anyone who has ever negotiated the price of a new or used car knows that “the price of a car” has several components, each of which affect the selling price to different extents. For our purposes, however, it is sufficient to know that dealerships often feel pressure to “make their numbers” (that is, sell as many cars as their quota calls for) at the end of the month and year. During these times, it is common for vehicles to be sold for less than they were advertised just a few weeks or months earlier. These are also the times when your negotiating leverage with dealers is at its highest, since you are fully aware that they are in a pinch and are willing to bargain. So if you’re in the market for a new set of wheels, it seems that waiting for the 28th of the month might not be such a bad idea.

Snow Clothing

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Winter jackets, snow boots and wool hats are all products that are only useful during the coldest months of the year. When the snow is falling and cheeks are turning red, these are the sorts of products that are heavily sought by shoppers and winter sport enthusiasts alike. But, similar to bathing suits, in order to outsell the competition and attract the most customers, many retail locations put their snow clothing on sale during the winter, even when demand is at its highest. And, since most holiday sales events fall during the coldest winter months, many of these items have their prices decreased to make them attractive to gift-buyers and bargain hunters. As with prom dresses, many retail stores also make the mistake of overestimating demand and ordering more winter clothes than they can reasonably sell. Once the snow starts melting and the sun comes creeping out, clothing and sporting goods stores need to get rid of the winter items they have crowding their limited shelf space. So if you’re planning to partake in winter sports next year or simply live in a cold climate, don’t wait until November. Late winter/early spring is generally the best time to stock up for the following season for a great deal less than sticker price.

Gym Memberships

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Gym memberships operate on a seasonal pricing schedule. There are two times a year that many people get motivated to get in shape: New Years Eve and the beginning of summer. Each year millions of people resolve to start a serious workout routine on January 1st, and gyms have adapted to this trend by putting their memberships on sale around this time. Unfortunately, a great deal of these people lose their motivation to maintain their resolution less than three months into the year and cancel their memberships.  But not to fret. Memberships return to their usual price only for a month or so, since it isn’t long until the warm spring sun comes out and people begin to think about whether or not their bodies are summer-ready. With visions of bathing suits and sandy beaches on their minds, a second rush of customers begins to hit the gym in the springtime. Again, most gyms recognize this social phenomenon and drastically slice the price of their memberships all summer long making January and May through July the cheapest time to get in shape.

Cable/Phone/Internet Packages

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Most industries consist of a great many companies competing against each other for the exact same limited set of customers. In the world of telecommunications, however, there exist relatively few providers and an entire country of demand to service. With only a handful of telecom companies available in any given region, the competition rages as to who will be able to become the biggest provider in the area. Ultimately, this leads to constant discounts and sales on bundle packages from all of the companies at around the same time. In addition, these cable providers are in constant competition with satellite providers who claim that cable quality is inferior to what they can offer with their service.  Thus, in  order to continue attracting customers to their particular offering, and to keep them from drifting into the satellite world, telecom companies are continuously motivated to keep their bundle deals as bundled and discounted as possible.

Music Equipment

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Musicians who live within a thirty mile radius of any big-name music retailer, such as Guitar Center or Sam Ash, are used to being inundated with weekly “blow-out sales” that seem to continue indefinitely. Each weekend brings a new, wilder savings event than the last, and many of us are left to wonder when such locations sell their instruments at regular prices and if they do so at all. In fact, what many music retailers do is use a common sales tactic that involves pricing their equipment lower than the manufacturer’s suggested retail price (MSRP) to make customers feel that they’re getting a great deal. However, contrary to what many people believe, the MSRP is not necessarily the price at which the store is supposed to sell the item, nor is it the amount that the store paid for it. MSRP is simply the manufacturer’s valuation of their product, which is almost always higher than the price at which the store actually prices the item. Retail locations have perfected the art of pricing an item for far less than the MSRP and then advertising it as huge savings and a must-buy deal for the shopper. Many smaller retailers also use this tactic, however, large music equipment chains seem to do it all 52 weeks of the year, making any time a good time to buy.

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  1. [...] more here: The Daily Bark » When to Wait for the Price to Drop Posted in Music Gear Sale Tags: involves-pricing, make-customers, manufacturer, msrp, [...]



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About Milo:

Milo searches the shelves of your local stores in real-time to find the best price and availability for the products you want to have – right now.

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