Comments on: We’ll Pay You $100 To Take The Monitor http://www.pfadvice.com/2006/07/26/well-pay-you-100-to-take-the-monitor/ Bridging the gap between saving money and investing Fri, 10 Feb 2012 02:42:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: empty spaces http://www.pfadvice.com/2006/07/26/well-pay-you-100-to-take-the-monitor/comment-page-1/#comment-4738 empty spaces Wed, 02 Aug 2006 19:01:16 +0000 http://www.pfadvice.com/?p=738#comment-4738 its a loss leader. its just an advertising ploy to get people into the store. they will then try to upsell you to something else. its a loss leader. its just an advertising ploy to get people into the store. they will then try to upsell you to something else.

]]> By: Trent http://www.pfadvice.com/2006/07/26/well-pay-you-100-to-take-the-monitor/comment-page-1/#comment-4684 Trent Wed, 26 Jul 2006 20:54:38 +0000 http://www.pfadvice.com/?p=738#comment-4684 Exactly. When they offer you the monitor upgrade they are trying to recapture some of the profit they otherwise lose. Let's say the monitors (sold separately) are $100 and $200, and at those prices each one gives the retailer a 30% margin. For argument's sake, we'll say the $350 package deal is a 10% loss ($35). So now, if you upgrade monitors by paying the extra hundy, the retailer gets the incremental $30 of profit and is only losing $5 on the deal. Instead of a 10% loss margin, it is now $5/$450 = just over 1%. He is hoping you take the monitor upgrade and possibly buy some extra printer cartridges so the deal can become profitable. That's the whole point of offering a loss leader. Exactly. When they offer you the monitor upgrade they are trying to recapture some of the profit they otherwise lose. Let’s say the monitors (sold separately) are $100 and $200, and at those prices each one gives the retailer a 30% margin. For argument’s sake, we’ll say the $350 package deal is a 10% loss ($35). So now, if you upgrade monitors by paying the extra hundy, the retailer gets the incremental $30 of profit and is only losing $5 on the deal. Instead of a 10% loss margin, it is now $5/$450 = just over 1%.

He is hoping you take the monitor upgrade and possibly buy some extra printer cartridges so the deal can become profitable.

That’s the whole point of offering a loss leader.

]]> By: mapgirl http://www.pfadvice.com/2006/07/26/well-pay-you-100-to-take-the-monitor/comment-page-1/#comment-4681 mapgirl Wed, 26 Jul 2006 14:29:42 +0000 http://www.pfadvice.com/?p=738#comment-4681 Was it a CRT monitor? Because if they break the package deal, there is probably a restocking fee at the manufacturer, which makes it more cost effective to dump the monitor on a consumer to keep/dispose than it is for the company to dispose themselves, i.e. take a loss on inventory/restock at the manufacturer. Restocking fees. Heh. Rapidly depreciating items like electronics are the only time I've ever had to deal with them. Fortunately, I don't get hit with them as a consumer. I've only had to deal with them as a professional purchaser. I see that lately places like Best Buy are charging them to consumers. I have to admit, it makes me a bit wary about buying stuff. Yet another hidden cost to consider when I ask myself if I really want something. Was it a CRT monitor? Because if they break the package deal, there is probably a restocking fee at the manufacturer, which makes it more cost effective to dump the monitor on a consumer to keep/dispose than it is for the company to dispose themselves, i.e. take a loss on inventory/restock at the manufacturer.

Restocking fees. Heh. Rapidly depreciating items like electronics are the only time I’ve ever had to deal with them. Fortunately, I don’t get hit with them as a consumer. I’ve only had to deal with them as a professional purchaser. I see that lately places like Best Buy are charging them to consumers. I have to admit, it makes me a bit wary about buying stuff. Yet another hidden cost to consider when I ask myself if I really want something.

]]> By: pfadvice http://www.pfadvice.com/2006/07/26/well-pay-you-100-to-take-the-monitor/comment-page-1/#comment-4680 pfadvice Wed, 26 Jul 2006 14:01:34 +0000 http://www.pfadvice.com/?p=738#comment-4680 <i><b>The retailer is advertising a very low price for a package in order to lure customers. The package price is less than cost. If you break up the package in any way they will not offer the same deal on it, and sell it at a profit. </i></b> Except I was offered the option of upgrading monitors, so (at least in this case) it wasn't a set "this or nothing" package. The retailer is advertising a very low price for a package in order to lure customers. The package price is less than cost. If you break up the package in any way they will not offer the same deal on it, and sell it at a profit.

Except I was offered the option of upgrading monitors, so (at least in this case) it wasn’t a set “this or nothing” package.

]]> By: Kevin http://www.pfadvice.com/2006/07/26/well-pay-you-100-to-take-the-monitor/comment-page-1/#comment-4679 Kevin Wed, 26 Jul 2006 13:24:29 +0000 http://www.pfadvice.com/?p=738#comment-4679 Exactly. It's like going to a sub shop when the ham, turkey, and bacon sandwich is the daily special for $2.49, and you want a ham sandwich. Hypothetically, if the sub shop had different SKU's and a tight inventory for each sandwich like a PC retailer, the clerk could very well say, "I'm sorry, the ham sandwich is $4.99." Exactly. It’s like going to a sub shop when the ham, turkey, and bacon sandwich is the daily special for $2.49, and you want a ham sandwich. Hypothetically, if the sub shop had different SKU’s and a tight inventory for each sandwich like a PC retailer, the clerk could very well say, “I’m sorry, the ham sandwich is $4.99.”

]]> By: Trent http://www.pfadvice.com/2006/07/26/well-pay-you-100-to-take-the-monitor/comment-page-1/#comment-4678 Trent Wed, 26 Jul 2006 11:18:43 +0000 http://www.pfadvice.com/?p=738#comment-4678 Actually there is no glitch and no excess monitor inventory (at least, if there is that's not the cause of the price discrepancy.) The retailer is advertising a very low price for a package in order to lure customers. The package price is less than cost. If you break up the package in any way they will not offer the same deal on it, and sell it at a profit. Likewise, that is probably the only package in the store that is sold so cheaply. You will likely find that you could buy that system and add upgrades (second hard drive, more RAM, etc.) part by part and still come out cheaper than buying an alternative system because they are losing money on the one computer advertised. It is a loss leader. The salesman is not interested in finding out why because it happens all the time, and won't tell you it is a loss leader because he would probably be fired if he did. Incidentally, this is also why retailers offer the lowest price guarantee on the advertised system - because their competitor will offer a slightly different one and thus there is no way for you to tell which is truly cheaper. Actually there is no glitch and no excess monitor inventory (at least, if there is that’s not the cause of the price discrepancy.)

The retailer is advertising a very low price for a package in order to lure customers. The package price is less than cost. If you break up the package in any way they will not offer the same deal on it, and sell it at a profit.

Likewise, that is probably the only package in the store that is sold so cheaply. You will likely find that you could buy that system and add upgrades (second hard drive, more RAM, etc.) part by part and still come out cheaper than buying an alternative system because they are losing money on the one computer advertised. It is a loss leader.

The salesman is not interested in finding out why because it happens all the time, and won’t tell you it is a loss leader because he would probably be fired if he did.

Incidentally, this is also why retailers offer the lowest price guarantee on the advertised system – because their competitor will offer a slightly different one and thus there is no way for you to tell which is truly cheaper.

]]>