Food Fridays: Savings are Overrated

I’m tired of savings. I try not to think about them any more. And it’s made me a better customer when considering food, clothes, cars, and even housing. I’ll explain why through a hypothetical example.

Here’s a question for you: would you rather save $4 or $2 on the same item?

It seems that $4 is the clear cut answer. Savings are good; that’s what our parents taught us. This mentality is so ingrained that advertisers have started to exploit it.

Consider two ads for cantaloupe:

Store A (saves $4)

Store B (saves $2)

Store A initially sounds like a better bargain. You save $4 when you buy two cantaloupes compared to only $2 at store B.

But on further inspection, both stores are exactly the same. It costs $4 to get two cantaloupes. Store B is actually the better choice if you only want one.

The “savings” are different because Store A lists a higher unit price per cantaloupe of $4. While that could signal higher quality in store A, I can assure you from experience this is not true. So essentially, store A creates an inflated sense of savings.

There is a surefire way to beat advertisers. Always compute the unit cost of items on your own. In both stores, the cost per cantaloupe is $2 (if you buy 2), so it’s clear the prices are the same. It’s pretty easy to compare when you have the right tool.

So perhaps to thwart you, stores quote prices in abstruse ways, like $7 for 3 items, or buy one and get one 50% off. The complicated price combined with an emphasis on savings is the ultimate knockout. Most customers shrug at the small barrier of doing a little arithmetic.

This is a costly laziness. Not because you pay a few dollars more at supermarkets. But because clothing retailers, car salespeople, and even housing offers use the same tactics. You will rarely see commercials for how well priced an item is. It’s always about “limited savings” and “deep discounts”–this suits the stores fine because they can adjust the list price to inflate the savings. Even I fall into the traps from time to time.

But often, I try to decide what to buy based on value (more specifically, I mean marginal benefit) and price. I try to completely ignore the advertised savings.