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Spending - Head Matters


1. Evaluate a Purchase

a. Understand why you must shop around to find the best price

Shopping around may sound like a drag, but if getting the best value is important to you – and it should be – then it’s an important step in your spending process.

Stores compete for your business. One of the ways they do that is by keeping their prices similar to their competitors’ prices. We, as consumers, all benefit from that competition. However, to make the competition effective, the stores are smart enough to believe that you are smart enough to shop around.  If no one shopped around and they just paid whatever the nearest store was charging, that store could charge anything it wanted. When you shop around, you tell the stores that you are aware of value and will do your homework to get the best deal.  In other words, you are not a chump, willing to pay any price for anything.

Let’s look at Jose’s experience shopping for an Mp3 player. Jose knows exactly which Mp3 player he wants. He heads to the nearest store and sees that it costs $160. Jose is about to buy the Mp3 player when he remembers that he saw an ad online, advertising the same Mp3 player for only $130. Thirty dollars is a lot of money!  So Jose decides that he needs to comparison shop—to look around-- to find the best price. He heads to the library and uses the internet to find out which store offers the best price. He’s also careful to make sure that the store has it in stock and to keep in mind that if he buys it online he may have to pay shipping. Jose made this chart to help him keep it all straight.

 Vendors  Cost  Shipping
 Store 1  $160  $0
 Store 2  $130  $0
 Online retailer 1  $120  $12
 Online retailer 2  $130  $6.50

Jose was glad he didn’t buy the mP3 player at the first store he visited, it turns out that it was much cheaper everywhere else he looked. Decide where Jose should buy his mP3 player with the following questions.

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