Do people really buy on price?

 

BY JOHN BARBA

guest writer

 

Now, there’s an interesting question. Do they? Do YOU? It’s easy to say “of course people buy on price.” But that’s way too general a statement to be considered an across-the-board fact. The trite answer to that question is if people truly did buy only on price, we’d all be driving Yugos. But that’s stupid. Yugos were garbage cars, and no one wants to knowingly buy garbage no matter how cheap it is. Perhaps the Yugo example isn’t the best example.

 

A better example would be this one: Why do people buy certain options on cars as opposed to buying the stripped-down version of the same car? Options cost money, right? Leather seats, dvd player, gps, power windows and door locks, mutli-zone a/c, premium sound package. These all cost money. We buy them. Why?

 

It’s easy to say, “Well, that’s what they stock at the dealer. I can’t buy a stripped down version.” Sure you can, if you’re willing to order it and wait for it. But we want a car, and we want it now. We also want all the nice little toys that come with cars. The more stuff, the more fun the car is and the more value it will have when we decide to trade it in.

 

We want the car to be comfortable and convenient as well as fun, and we’re willing to pay for that. The car makers know this too, and they make it easy for us to buy the options by packaging them for us, and putting the most popular packages on most of the cars they make. 

 

They also make cars in different colors, just in case it matters to you. When I first got my driver’s license, my parents had a silver Ford Grenada. I drove it to my prom. My first car was a silver Subaru. My next car was silver Renault Encore. My third car was a silver Dodge Laser. By 1986 I was sick to death of silver cars and bought a black Jeep Wrangler. I don’t ever want another silver car again. No matter how much it costs.

 

But don’t people want the best deal on whatever car they decide to buy? So maybe they want to buy the car with all the extras as opposed to the stripped-down version. They’re going to shop around until they find that car, or one pretty close to it, for the lowest possible price, aren’t they? Some will for sure, but does everyone? Do most people? At what point do people decide that hunting for the best price isn’t worth the time, effort, distance or aggravation that’s required?

 

Let’s pretend that Car A is priced at $23,000.00 at a dealer half-way between home and work in about as convenient a location as possible. Car B, the same make and model with most, if not all, of the same features is priced at $21,850.00 at a dealership some 35 minutes north of you and totally out of the way of your work.

 

Is the 35 minute drive for service and warranty work worth $1,150.00 to you? What other factors might go into your decision? Suppose the dealership selling Car A also has earlier and later service hours and a loaner program so you can drop your car off on your way to work, use their loaner car to get to work, and pick your car up on your way home. Does that count?

 

Maybe the dealer selling Car A is also offering you free oil changes for life as long as you have your car serviced there, along with free car washes. Maybe their financing terms are a little more favorable. Maybe you have friends who bought cars from this dealer and have been very satisfied. Maybe the credit manager is a hot redhead and seems to like you.

The point is there may be several other factors, beyond price, that may very well lead you to buying Car A for $1,150.00 more than you could have bought the virtually identical Car B.

 

We find instances each and every day when we don’t buy the cheapest stuff. If you’ve ever purchased anything at an airport, you’ve traded convenience, hunger or thirst for price.

 

Convenience worth the cost

 

I’m writing this at Logan Airport in Boston, and just a half an hour ago I bought and ate a fried clam roll for $14.00. Now, I could have bought a clam roll somewhere else for a lot less, but that would have involved going back through airport security, getting my car out of the parking lot, leaving the airport, driving up to the North Shore and finding a clam shack somewhere, buying and eating the clam roll, and then going back to the airport, finding another parking space and going through airport security again, all in order to pay a little less for the same clam roll (maybe even a better one!).

 

Naaah, I don’t think so. I could also have picked out a less expensive lunch, like a burger or a hot dog. But since I live in the Midwest, burgers and dogs are easy things to find. I really, really wanted a clam roll, so I forked over more money for the lunch of my desire. And it was worth it!

 

People will trade price for all kinds of benefits: convenience, schedule, style, quality, comfort, professionalism, service, fit or preference. All can, and often do, take precedence over price.

 

Buying for convenience may very well be the most common buying practice in the world. Convenience stores are the obvious example. A bag of chips and a bottle of soda are common purchases at any corner store. A 12 oz bag of chips costs $0.99 and the 16 oz bottle of soda goes for $1.19.

If one were to instead go to a grocery store, a 48 oz bag of chips goes for $2.29 and a two-liter bottle of the same soda costs $1.29. If you consider value as what you get divided by what you pay, you’re getting screwed at the convenience store, aren’t you?

 

But it’s a small store, you can get in and out quickly and the portions are sized for the quick, on the go snack. That’s worth something.

 

Just about anything purchased at an airport, ball park, hotel or shopping mall is usually a convenience buy, and we pay for that convenience. On the interstate, it’s easier and more convenient to refuel at the service stops rather than get off and hunt for the bargain. You can drive from Albany to Buffalo on the back roads or on the New York Throughway. The Throughway costs more, but is a heck of a lot faster and easier than the back roads.

 

What about style? Do you buy the cheapest clothes you can find, even if they look ridiculous and don’t fit? If I see you wearing a pink polka-dot shirt with electric green Bermudas that look like they came off the George Foreman rack even though your nickname is “Skinny,” I’ll believe you.

 

What about airfare? You can fly from Minneapolis to Boston direct, or, for a little less money, fly through Detroit, Chicago, Memphis, Atlanta, Cleveland or Cincinnati. Or through all six cities for even less money. How much cheaper does it need to be to make the six hour flight and layover a better deal than the 2 and a half hour non-stop?

 

This is all great stuff, but what does it mean when a customer tells you your price is too high?