The Money Game

Retailers know what’ll get you into their store, what makes you want to buy and how to get you to buy more than you came for. Don’t be a victim.

I have three older siblings, and when I was a little kid, they were, of course, big kids. So, inevitably, I fell prey to their big-kid tricks. When one asked if I wanted to play “52 Card Pickup,” of course I said yes, then learned this meant I would pick up exactly that many cards from the floor. When my big brother offered me a Hurts donut, I said yes … and received a punch in the arm that did hurt. I agreed to play Hide-and-Seek with them, then emerged from my brilliant hiding place 10 minutes later only to find that they’d ditched me and gone to the beach. And I’m pretty sure they got me to trade some puny dimes for just as many big shiny nickels.

The learning curve into the big-kid world was steep for me. But I eventually learned the tricks of that world, and, thanks to my parents, had three younger siblings to practice them on.

For most of us, entering the consumer world is a similar journey. We’re young and naive, and pay the price for it. Literally. The problem is that we’re playing in a world where the “big kids” — the sellers — know far more about the consumer game than we do. After all, they’re professional players, while most of us are just amateurs.

Retailers know what will get us into their store or Web site, what makes us want to buy and how to get us to buy more than we came for. They’re good because they practice the selling side of the game with dozens or hundreds or thousands of buyers every day. Many retailers sell more times each day than any one of us buys in a month. That makes for a lopsided game.

But it doesn’t have to be a shutout. Though we can’t afford to practice buying as much as they practice selling, we can still get pretty good at this game by studying how they play their side. This month I’ll share with you a few of the tricks of the consumer game. Specifically, three ploys professional sellers use to win your money. They’ve got plenty more (and they’re inventing new ones all the time), but these three are among the most common. If you know them, you’ll know how to avoid them. Feel free to take notes.


Retailers use this word a lot. They want you to think you’re getting a better deal from them than from someone else. Maybe, maybe not. In the business of buying and selling, discount simply means a price that’s lower than some other price. But what’s that other price? It could be anything.

For example, a discount could be based on something called the retail price. Typically, this is the price the manufacturer suggests as the amount of money the average consumer would be willing to pay for the product. Sometimes you’ll see it abbreviated as MSRP, for manufacturer’s suggested retail price. The key word there is suggested. In the free-market U.S., price fixing is illegal. A manufacturer can’t tell its retailers they must sell a product at a specific price. So they suggest a price. No retailer has to sell stuff at that price, but they can use that number to figure discounts which sound really good to consumers: “20% off MSRP!” lets you think you’re getting a great deal, even if the manufacturer’s suggested price is too high to begin with.

Some discounts are figured on something even more arbitrary: the regular price. What’s regular? Anything the seller chooses. Indeed, some retailers come up with an inflated regular price — a price nearly no one will ever actually pay — then use it to generate a high-digit discount that turns out to be no great deal. Hotels use this trick all the time. My frequent flyer accounts often come with coupons for 50% discounts to major hotels. When I call to make a reservation, I find out that I get half off the rack rate, which means I’ll pay, let’s say, $100 instead of $200. I think I’m getting a great deal till a friend tells me he called the same hotel and was quoted an $85 special rate … and he doesn’t even have a coupon. Regular prices are anything the seller wants them to be, so any discount figured on them is suspect too.

Another way to offer a discount is to sell things at the wholesale price, or at cost. This is the price a retailer can get from the wholesaler (the manufacturer or distributor). Finally, we have a firm price — and one so good that the retailer doesn’t even make a profit. Not so fast. Wholesalers generally don’t offer an item at a single, firm price. They sell things in big batches: The bigger the batch, the lower the price per unit. The retailer may pay $50 a unit for an order of 10, or $40 apiece for an order of 100, or $25 each for a thousand units. Which of these wholesale prices are they offering to you?

But wait: It gets even trickier. Just because a retailer sells something at cost doesn’t mean they can’t make a profit on it. The price you pay may be what the retailer paid for it, but what you don’t know is that they just might be getting a juicy rebate from the manufacturer, so they still make money. If you’ve ever seen a car dealer advertise prices that are “below invoice,” you’ve witnessed this trick in action: They’re getting a rebate (i.e., dealer incentive) from the manufacturer that provides their profit even when you pay less than they did.

With all these pliable prices, how can you know what kind of deal you’re really getting? Forget about discount percentages and MSRPs and wholesale prices. Just compare actual prices between different sellers. It doesn’t matter if one store is offering a 10 percent discount while another is selling something “half off” if they’re not basing their percentages on the same original price. You don’t care how much you’re not paying: Your only concern is how much you are paying. Shop for the lowest actual price.

Save Big!

This one irritates me. It’s a philosophical thing. I spend a fair bit of time encouraging readers to save their money, and showing them ways to do it. When I see retailers pitching the same message — “Save Big! Save More!” — I should be pleased that they share my mission. But as it turns out, they don’t. When they say “Save!” they’re talking about something else.

The only real way to save money is … well, to save it. That means not spending. When a retailer declares that you’ll “save money,” what they really mean is that you’ll spend less of it than if you buy somewhere else. (And as we saw with that discount trick, even this claim is suspect.)

Whether you spend $100 for something or find it elsewhere for $90, you’re still spending. And that’s not the same as saving. Of course, retailers don’t want you to think that way. They know that if you focus on what you’re spending, you may have second thoughts. So they redirect your focus from that negative “spend” idea to the positive “save” word. But remember that every dollar you spend is a dollar you’re not saving. When you see a big SAVE! sign, do what it says: Go make a deposit in your savings account. That’s the only real way to obey such a sign. There, I’m done venting. Let’s move on.

Buy Now!

Retailers like to create a sense of urgency. They know that the moment you walk out of the store or click out of their Web site, they lose their best chance of making a sale. They’re not keen on the idea of your finding a better deal elsewhere, or blowing your cash on a pizza party (unless they sell pizza, of course), or sticking the money in the bank instead.

To make the sale before you walk away, they’ll tell you that time is limited: If you come back later, the sale will be over and you’ll have to pay “full price” (whatever that means). Or they’ll tell you that quantity is limited: It may be gone when you come back later. True enough, but for all you know they’ll extend the sale, or honor the sales price even when it’s over. Or maybe they have a truckload of the stuff parked out back, or can order more from the manufacturer or another store. And even if they do run out, is that such a shame? Do you really want this thing? If you didn’t get it, would it upset your world? Walking (or clicking) away to think about it is the best way to answer these questions.

Every once in a while you’ll encounter a salesperson who plays hardball with urgency ploys, telling you that the deal is a once-in-a-lifetime opportunity or that you can’t afford to walk away. It seems to me that these expressions apply to things like faith, family, relationships. I’ve been buying stuff for a few decades, and I’ve yet to find something that could be bought with money that was worthy of these terms. When I hear them used by a salesperson (typically it’s from a suspicious character selling electronics gear out of the back of a van), I walk away. Without exception. Maybe I’ve missed one or two spectacular opportunities, but I’m certain that whatever I’ve missed out on has been more than made up for in the countless bogus and unnecessary deals I’ve turned down.

Playing the Game

Buying and selling is a big game, and the sellers play professionally. It pays to learn their tricks, and to practice a few of your own: Compare real prices. Save by saving, not by spending. And buy on your time, not theirs — saving is an urgent matter, spending can be procrastinated.

The sellers may be experts, but you can be a formidable amateur opponent. Now go play this game to win.

Copyright 2003 Todd Temple. All rights reserved.

About the Author

Todd Temple

Todd Temple is the author or co-author of 19 books, including several about money. He also produces video, multimedia and interactive programming for youth conferences through his company 10 TO 20.