On the Cheap

Spent the past few days reading Cheap: The High Cost of Discount Culture. It’s mostly about how we shouldn’t buy all that “Made in China” crap. Cheap stuff means workers aren’t getting paid, the economy goes bust, yada yada.

I’m not so interested in that. What I want to know is: How am I getting ripped off? Cheap offers a lot of insight into this all-important topic. Here are some of the retailer’s tips and tricks that I’ve learned:

1. Take a $300 handbag and display it next to $1,000 handbags, and it looks like a steal. But put that same handbag next to a $30 handbag display, reality hits and it’s suddenly too expensive for your customers.

2. If you offer a brand label jacket for $100 below market price, people will think something’s wrong with it. Price it $80 higher, and you’ll get the people with the rose-tinted glasses who are motivated to buy.

3. Get two generic brand items of the same type (such as suntan lotion), and price one higher than the other. Most people will assume that the more expensive one is higher quality.

4. Use rebates. Your customers are lured to buy, then they won’t bother to fill out the forms. Don’t give them too big of a discount though–that will motivate them to mail in the paperwork.

5. Set up an outlet mall in the middle of nowhere. Your customer will burn up gas and wear out shoe leather in order to save money at Coach and Anne Klein. You save big time on rent and shipping costs.

6. Sell cheap stuff that breaks easily (like IKEA). Your customers will buy all new stuff rather than trying to fix or modify it themselves.

7. Seal up your products so that your customers can’t change the batteries (like Apple). When the time comes, your customers can pay $60 to have you change the batteries, or they can pay $300 for a new iPod.

8. Get a brand name prescription drug and slap a generic label on it. Hand it to your guinea pig, and you’ll find out that the drug is less effective than it was before. This means that generic brand drugs will always be less effective, regardless of quality, simply because of people’s perceptions of it.