The title must have amused you. Obviously this word is a girl’s best friend. The four letters bring a wide smile on anybody. Yes when I say anybody I actually mean anybody and everybody. It’s a myth that men don’t like to shop. They love shopping and love sales too. Have you ever noticed you get the sudden urge or liking for a product when you see its on sale. We sometimes buy really bad and unnecessary stuff when its on sale. I am not denying that I haven’t done that . Yes I am as guilty as some of you are. I have a question for you all. Do you buy any brand which is on sale or you have a special preference or affinity towards particular brands? I have special preferences. I do not buy anything which is on sale.

For those who do not understand the cost structure, I shall show you a simple thing. Yes I am a commerce graduate and I do know a little bit of it at least.

                                                            Selling price = Cost + profit

So whatever we buy, gives the company some profit. A company never sells below their cost price. That is, if a product costs the company 50 INR with all expenses included, the selling price will always be above 50 INR.

We have season end sales, clearance sales, and by sales here I mean discounts. Major companies offer discounts upto 70%. 

But do you know even after price reduction upto 70% the companies still earns at least 5-10% profit. They earn lesser than this only in extreme cases. But generally they always even after offering discounts have a profit mark up of 5-10%. So do you all realize that we pay 1000 bucks for a piece of a garment or a pair of shoes which hardly costs 200-300 bucks after including all the expenses! Yes shocking. Many of you must be aware of this and many of you would have not bothered to think about it.

I am aware of this strategy, yet I pay a lot of money to buy a particular thing I like.

Why should you pay so much for a product when it does not deserve such a high price. Well in my knowledge I have a few reasons for this.

I am listing down a few points that make us pay more for a product.

*     BRAND NAME- I pay more than what a product costs when the product belongs to a recognized and a very famous brand. Yes this comes first. We are all slave to certain brands. They make us pay how much ever they demand. We have always learnt that lower the price, higher the demand. But there is a theory by Mr. Veblen which is called the VEBLEN EFFECT, which says that few luxury goods attract customers when the prices are high. E.g diamonds. In terms of fashion, it’s the famous and controversial BERKIN bag. What is in it that bag, that people even wait for it? The scarcity of the bag and the brand name increases its value.
*     MONOPILISTIC COMPETITION - There are few products which force us to pay higher prices. There are no available cheaper substitutes.
*     QUALITY- sometimes we buy something because of its great quality and when we are sure we will be unable to find such an amazing quality and you do not mind paying more if you are actually getting something good.
*     CHARITY- this is applicable for the rarest of the rare. People of the elite class buy products of higher prices in the name of charity. This is irrelevant for me.

So all I mean to say is are you willing to pay ridiculously high price for anything? I suggest one should only pay more if they think the brand is worth it or if they get good quality. I see few brands that charge high prices even when there is neither brand value of that company nor the quality is good. One should avoid buying such products. If you want to buy a product of good brands but you think it might burn a hole in your pocket, then wait for the discounts and buy good products. So many companies offer discounts, who am I kidding you all here know that. Let them earn some money and you go home with pretty pretty things. But be a smart shopper. How much ever you pay, ask yourself, “Is it worth it?” If you think its not worth the money, just leave it and go to some other place.

Few brands which just melt my heart and can make me pay high prices-

ü  MAC

I hope you liked the article. 

Love, Sindhu

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