The relative value/worth of things...

Lsilvertone on 21/09/2014 - 13:58

I'm finding that with what seems like increased discounting in Australia, that my idea of the value or worth of an item has changed.

Thirty years ago in school economics, I was taught that the value of something is caused by supply and demand. If there's an oversupply, it'll be worth less, if it's rare, it'll be worth more. But more and more I don't see this.

To give you three examples…

1) Helga's/Abbott's Village loaves of bread at Woolworths and Coles. These loaves have a "normal" price/value of around $5. But usually every week, one of the big supermarket chains will have them as low as $2.50. I find now that I can't ever pay $5, to the point of going without, because it's only "worth" $2.50 to me.

2) Sales at Dick Smith. Ususally every fortnight, there's at least one discount "sale" of up to 20% off. As some people have been pointing out on the DSE deals posted, they are no longer deals/bargains because this has become DSE's "normal" price.

3) Living Social discount. At least once a week, there's been a discount code of up to 20%. To me, this indicates that the "normal" price is 20% too high and I won't buy anything until there's a new code.

What do people think, does this kind of discounting impact your future spending patterns with that retailer? Are retailers "shooting themselves in the foot" by doing these discount so often?

General Discussion

Comments

  • ammark19xx on 21/09/2014 - 14:55
    +5

    Just one correction: the interplay of supply and demand creates 'Price', not value. Value is its inherent worth or utility to you. For example, the iPhone 6 16gb is priced from $850, and given the consumer uptake, it seems to be priced fine. But I personally don't think it's good value and it does not gives me enough utility for me to spend that much on it now.

    For most things advertised prices/ RRPs are inflated. Whether you find value in paying that price or paying a lower price is purely up to you. As a consumer it's your right to complain about atrocious pricing too, so thanks for venting your concerns.

    • retiredfeline on 21/09/2014 - 16:52

      +1, worth is subjective. @OP Some people will pay full price for a variety of reasons like ignorance, not bothered, need it in a hurry, somebody else (company, eg) paying for it. You need not worry about big companies, they've factored this in their price strategy. Therefore an OzBargainer wins by being contrarian, buying ahead of time, stockpiling, looking for alternate sources, going without until the next sale, and other strategies.

    • scrimshaw on 21/09/2014 - 18:03

      To quote Wikipedia:

      Economic value is not the same as market price. If a consumer is willing to buy a good, it implies that the customer places a higher value on the good than the market price.

      The difference between the value to the consumer and the market price is called "consumer surplus". It is easy to see situations where the actual value is considerably larger than the market price: purchase of drinking water is one example.

  • t_c on 21/09/2014 - 15:32

    With the price of housing at record highs then you got the electricity bill, gas bill, water bill, rates bill, house insurance bill then the mobile bill, internet bill, rego bill, petrol bill, car servicing bill, car insurance bill, credit card bill you really need to be in the top tax bracket to afford a $5 loaf of bread, retailers probably have to discount more as the discretionally dollars on the income pie keeps getting smaller.

    • ethereal88 on 21/09/2014 - 15:39

      No gas bill here, no rates, no insurance of any sort, no car (ever), no credit of any sort. Living within your means more like.

  • altomic on 21/09/2014 - 15:48

    I look at supermarket deals as not so much what I am saving but how much profit the supermarket is making when it is regular price. I doubt the big chains are losing money on Helga's/Abbott's Village loaves at their current special price.

    • banzini on 21/09/2014 - 20:36

      Yep agree. They're still making money when the item is 50% off. They just gouge you when its full RRP as the high coin earners/company purchases who don't care just buy, buy, buy.

      If everyone was an ozbargainer and never paid full RRP for example at Woolies, then the companies would have to change their strategies a bit.

  • Settero on 21/09/2014 - 16:28

    1) Helga's/Abbott's Village loaves suddenly stop going on special for ages and are only available for 5$ , all other similarly priced products stop going on sale, your option for 2.50$ is wonder white, which do you buy ?

    2) DSE sale prices start being higher than the normal price from other stores but its 35% off! do you buy from dse or another retailer that gives you the best price ?

    3) McDonalds offers a 1$ cheeseburger for 3 months, prices return to normal do you never eat another cheeseburger from McDonalds ?

    whats good "value" now might not be available later, or at a convenient time and thus the real question is , would you pay more for a product if you needed it or it was unavailable for less.

    • scrimshaw on 21/09/2014 - 18:07

      Another good example is drinking water.

      Everybody knows a litre of bottled H20 costs practically nothing and you can buy a large bottle for 80 to 90 cents. You can also buy flavoured soda for the same price.

      The smaller bottles of water strangely enough costs $1 to $1.20 and small bottles of soda cost $2~3. Why's that? Convenience of the packaging. On a really hot day, you're more likely to be buying the small bottles because it's easier to carry and it fits in your backpack. The marketers know this and prices the water accordingly. And at concerts and special events the bottles of cold water suddenly fluctuate to $3 to $4.50 apiece. Again, convenience factor.

  • Almost Banned on 21/09/2014 - 16:30

    I can definitely say that the Air Asia Business Class deal that was posted on here back in March (I think) has totally changed the way I look at pricing of flights into Asia.
    It is very hard to buy even a bargain ticket after that awesome deal.

  • Shadow54 on 21/09/2014 - 16:34

    If you can seel me a product today for $1 which you were selling yesterday for $2, then I'm unimpressed because you were ripping me off yesterday and actually admitting it today!! That's way I hate Coles and their "circular" pricing practices. My favourite coffee is discounted every 4 to 6 weeks for about 48 hours. They are just playing <profanity> sneaky games and still making 200 percent profit.

    • altomic on 21/09/2014 - 19:41

      exactly. like, a few weeks ago, when woolies had doritos large bags for $1.50 and then the next week they were on "special for $2.10". dafaq

      • GnarlyKnuckles on 22/09/2014 - 02:05

        All specials are special, but some specials are more special than others… ;-P

        That's a hilarious example you cite though, of following a $1.50 special with an increased price that was still claimed to be a "special"! lol

        Someone at woolies must have accidently got the order that the specials were supposed to occur in backwards methinks!

  • tonyjzx on 22/09/2014 - 00:13

    theres a lot of people who just dont care

    and the reality is colesworth knows they lose a bit here but they make a damn lot elsewhere

    let me put it like this… i use coupons and codes for kfc hj and dominos

    this is the new norm

    even with these prices, they still make money

  • BenK-Oz on 22/09/2014 - 07:27
    +1

    I have the same mindset, anyone who can discount by 25% and will make a profit has a mark-up way to high. Kmart is about the only retailer responding to this mindset. They don't do sales anymore because they think it devalues the normal price, so they just do "low prices everyday"

  • slewis69au on 22/09/2014 - 08:59
    +1

    Despite everyone on here's assertions the bread example is fundamentally flawed. Coles does NOT make an extra $2.50 on that bread when it's not on special. Most specials are driven by a drop in the supplier price or sometimes Coles/Woolies pressure on the supplier to drop the price for the special, oh and pay us the privilege of having your item on special, but that's another story for another day…

    I am sure the supermarkets would LOVE to be operating on the sort of margins you guys think they are but they simply are not. 2-5% markup used to be the norm, i am sure they make more now with their supplier gouging and pricing strategies but not the stratospheric heights everyone here thinks.

    • Euphemistic on 22/09/2014 - 13:19

      They also discount stuff to get you to try it. Drop the price of the premium product occasionally to match the price of the home brand or similar basic product. This gets people to try the premium product, once you've tried it and it is better you are more likely to buy at full price - unless you're an ozbargainer and won't ever pay full price.

    • GnarlyKnuckles on 23/09/2014 - 19:21
      +1

      "2-5% markup used to be the norm…"

      That's rubbish hombre; they'd have gone out of business with a margin like that. What are you basing that statement on, may I ask?

    • Shadow54 on 24/09/2014 - 09:44

      Sorry, mate, I totally disagree with you. When Coles sells potatoes at $2.50per Kg for which it pays 10c per Kg, the mark-up is 2500%. One of thousands of examples. If you think supermarkets make 5% or 10% (except for very rare cases) then you are in la-la land………..

      • GnarlyKnuckles on 24/09/2014 - 22:38

        So slewis69au, re the following text from your post:

        "I am sure the supermarkets would LOVE to be operating on the sort of margins you guys think they are but they simply are not. 2-5% markup used to be the norm…"

        In telling us we are wrong, you have used rather confident wording. So again, may I respectfully ask you what you are basing your "information" on? If you are in fact just mining highly questionable assertions from a somewhat fragrantly questionable orifice, then that's no worries/ I can write it of as simple BS/ a mistake on your part. But if some actual official entity has told you these things and you have believed them, then not only do you need to be set straight, but they also need to be told to stop misleading peeps.

        I am eagerly awaiting your response.

  • GaryQ on 22/09/2014 - 09:37
    +1

    The bread is a loss-leader, to get you into Coles instead of Woolworths or vice-versa. If all you do is go in and buy 10 loaves of 1/2 price bread, yes they will lose money. But if you go and do your weekly shop and spend $160 in X instead of Y, then the supermarket has won overall

    • Shadow54 on 24/09/2014 - 09:45

      In quantity bread costs less than 50c per loaf to bake…………. so even the 99c loaf is making 100 percent profit!

  • goosegog on 22/09/2014 - 12:33

    I have now started buying bread ( wholemeal or multi-grain ) for 99c. from our newly opened Spud-Shed store here in Perth. It is great quality & made by a company called Colonial. Also Spud-Shed sell all their fruit & veg. @ vastly lower prices than the majors i.e. coles & woollies. e.g. 10 kgs of potatoes $4.99, 5kgs. carrots $2.49, brocolli 99c, cauli $1.49 & the list goes on. All products are fresh & good quality. I am a very happy customer who will now boycott the majors with their ridiculous prices.

    • altomic on 23/09/2014 - 03:28

      my family has recently mostly stopped eating bread. we were going through 2 -3 loaves a week. now it is 1 a fortnight. partly a gluten thing.

      local spud shed type places are awesome. I used to love going to Arnolds in Wodonga. now in North Bris and there isn't one nearby.

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