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Deals, or the appearance there of, are very effective tools for getting Joe Consumer to spend money. The problem is that the better the deal, the worse the profit is for the seller (a.k.a. “the man”), and everyone knows that the objective of any good business is to maximize profit. Enter the “packaged deal.”
A packaged deal accomplishes two things for the seller’s benefit: 1) the assurance of a “deal” persuades consumers to drop their guard and open their wallet and 2) on average, packaging things together gets people to spend more money than they originally intended. With these two weapons in hand, we the consumer have been snookered into such purchases as the Bee Gees box set, vacations to odd destinations, and way too many Abraham Lincoln postcards. When looking at packages, one needs to first decide what they really want, then evaluate what is included in the package, and finally determine if the package is cost effective.
I had a perfect example of this just a couple weeks ago when I was taking the Misses (with our little one) on an overnight trip for our anniversary. A cute inn on the water not too far from my house had been recommended to me by some family members. I took a look at their website and found it to be quite reasonable for the special occasion. On a side note, fellas, it’s times like this when you need to turn back the ol’ cheap o meter a couple notches. No need to go crazy on me, but I’m pretty sure that these accomodations aren’t the right way to say “happy anniversary.” Back to the story, I noticed that this quaint inn offered several amenities that were appealing to me (golf) and the Misses (spa treatments). I also found a packaged “deal” that included both golf and spa treatments. Since this package passed the first test (included everything I wanted), I broke it down further to see if it was cost effective. As it turned out, the price of the room, golf, and spa treatments were slightly cheaper when purchased a la carte instead of in the package. The difference was marginal, but I decided to book the room without the package and keep my options open.
Packaged deals can also include more of the same product in an effort to get consumers to buy more than they normally would by advertising the substantial savings per unit purchased. Warehouse stores or bulk distributors thrive on this practice. They drive down the price per item by increasing the amount in each unit for sale. This can be very cost effective for the consumer as long as they are using the entire product and not letting it go to waste, thereby throwing their cost savings right out the window.
Here are a couple packaged deals to watch out for:
- Fast food - In most cases, “value meals” at fast food restaurants are nothing more than a slight savings on the drink and are the same price as ordering everything a la carte. If you would rather just have water (the free kind), build yourself a meal off the dollar menu and save a couple bucks.
- Shoe stores - Usually, at least for guys, when you go to a shoe store it is to buy a single pair of shoes. The shoe store man knows this and decided to implement the “buy one get one half off” deal. For some, those that need two pairs of similarly priced shoes, this is a great deal, but for most it just forces us to spend more on shoes. If you don’t need two pairs of shoes, concentrate your efforts on the clearance rack.
- Travel Agents/Vacations - This one can go either way as I’ve seen substantial savings on airfare, car rental, and hotel when everything is purchased together as a package. The problem lies in all the extra stuff beyond these three basic necessities. If you don’t really want all your meals and activities included because you like the option of exploring the local scene, then an all-inclusive package may not be a very great deal. As a rule of thumb, I compare the price of the package with the extra fringe benefits to the cost of purchasing all the necessities (air, car, hotel, etc.) on their own. If the difference is marginal, the package might be the way to go as you get lots of extra “stuff” for a couple extra bucks.
There is nothing wrong with buying a package deal as long as it passes the Frugal Franco test (Does it include the things I really want? & Is it cost effective?). Don’t get tricked into buying more than you need or committing to more than you intended just because the package looks like such a deal.
Ciao,
Franco
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