THE DEAL DUDE SALUTES... JACK HOUGH
The business columnist, writing in 2010 in Smart Money, pointed out studies that show that you can raise the price on your house and it may sell quicker than if you try to make it sound cheaper by using the old "99" trick. That is, he pointed out, people subconsciously interpret precise numbers as being smaller than round ones. So if you price a house at $401,298, it might register as being less expensive than $399,999. A study of real-estate sales in Long Island and South Florida found that houses originally listed without zeros in the price got higher final prices than those where bidding started with a round number.
THE DEAL DUDE SALUTES... UNIVERSITY OF MINNESOTA
Researchers at the Carlson School of Management found in a study that, when given the option, consumers usually choose something extra instead of a discount, in large part because they have a hard time with fractions. The researchers offered volunteers a choice when a package of hand lotion with 50 percent more lotion or a package that was on sale for 35 percent off. Most people (73 percent) chose the larger package because they don't realize that 50 percent more product isn't as good a deal as 33 percent off. Further, the researchers pointed out consumers are often confused by "double discounts" -- if something is on sale for 20 percent off, and then an additional 25 percent is taken off, it's not a 45 percent discount. In fact, you'd be better off with an item that was reduced once by 40 percent off. Retailers often exploit these "numerical blind spots" with shoppers.
THE DEAL DUDE SALUTES... KATHY SPENCER
A guru of the "extreme couponing" set, Spencer expressed regret for "a madhouse full of crazy women fighting over toilet paper" at a drugstore after she explained on her website how to get free products. She says newcomers to extreme couponing turn into "vampires" who clear out stores with their often complex methods to get free stuff. Spencer also showed a Boston Globe reporter a closet filled with toilet paper. Cheapness has its limits, and the first step toward recovery is to admit you have a problem.
THE DEAL DUDE SALUTES... HILARY SWANK
The Oscar-winning actress learned the value of thrift during a hardscabble upbringing in a trailer park in Bellingham, Washington. Today, although she makes millions of dollars per film, she still clips coupons. "Just because I have some money now, I wouldn't? I still see it as a dollar in my pocket. People who have come from nothing, you've always had to fight for what you have, so it's in your marrow."
THE DEAL DUDE SALUTES... JEFF YEAGER
For his book, The Cheapskate Next Door: The Surprising Secrets of Americans Living Happily Below Their Means, Yeager traveled the country to hang out with and interview about 300 self-proclaimed cheapskates. He found that rather than being obsessive coupon clippers or bargain hunters, most didn't spend much time thinking about money. While he encountered a few oddballs, such as families who pull groceries out of Dumpsters, most just spend less than the average American. Yeager found that his subjects, who he calls "premeditated shoppers," said they only regret about 10 percent of what they purchase, compared to 80 percent of all Americans. As Yeagle told the New York Times: "For the cheapskates next door, debt still stings. They recognize the difference between affordability – 'can I truly afford it?' and what I call borrowability – 'can I borrow enough money to buy it?' Most Americans confuse the two, and that's a root cause of the current economic debacle."
THE DEAL DUDE SALUTES... GEORGE LOEWENSTEIN
In a study conducted by this behaviorial economist from Carnegie Mellon with neuroscientists from Harvard, the brains of volunteers shown high prices for desirable products registered the same response as they would to offensive smells and social snubs. From this, Loewenstein concluded that it's the pain of paying that keeps tightwards from opening their wallets. Spendthrifts feel less pain. Loewenstein and one of his doctoral students, Scott Rick, also have discovered that men are more likely to be tightwads, as well as PhDs (particularly engineers). To determine if you are a spendthrift or tightwad, take their test. They also found, according to Lee Eisenberg, author of Shoptimism, that neither tightwads nor spendthrifts like their approach and tend to marry someone unlike them, which leads to conflict. "Given that tightwads want to minimize their pain, they are more likely than spendthrifts to succumb to what researchers refer to as 'situational factors,'" or gimmicks. This means they are more likely than spendthrifts to pay a $5 shipping charge if it's called "a small $5 charge."
THE DEAL DUDE SALUTES... KEINEN AND KIVETZ
Anat Keinen of Harvard and Ran Kivetz found in a study that tightwads don't enjoy the present but always attempt to maximize the future, according to a story in Psychology Today. They call this phenomenon "hyperopia," which is a medical term used to describe farsightedness. Along with Oded Netzer of Columbia University, the two have labeled another phenomenon they call "the functional alibi." Kivetz told Psychology Today: "People are more likely to spend money on luxuries whe they can justify, even on a subconscious level, some functional aspect, even if they never use it. High-tech items are a good example. Good food can even be justified as, 'Well, I have to eat.' It's a way to indulge without guilt."
THE DEAL DUDE SALUTES... TESTOSTERONE
Neuro-economist Karen Redwine and her colleagues at Whittier College in California found in an experiment that testosterone may cause men to be cheap. They gave each male volunteer $10 to divide with another man, who could accept the offer if it seemed fair. Volunteers who were given a testostorone cream that doubled the amount of the male hormone in their blood reduced the amount of money they offered by 27 percent. Also, those men who got hormone boosts and were asked to judge a "fair" offer in receiving the money were less willing to accept anything less than 50-50. (A note: even without the hormone boost, men rarely offered to split the cash in equal amounts.) "Our broad conclusion is that testosterone essentially causes men to be stingy," Redwine told New Scientist.
THE DEAL DUDE SALUTES... BLATTBERG AND WISNIEWSKI
Marketing scientists Robert Blattberg and Kenneth Wisniewski used supermarket scanner data to conduct one of the first studies of the effect of prices that end with a nine. For example, they found in their 1987 research that when the price of margarine were lowered to 71 cents from 89 cents, sales rose by 65 percent. But when the price was lowered to 69 cents, sales rose by 222 percent. They estimated that knocking a penny off a price so that it ends in a nine will increase sales by at least 10 percent. (Cite: Blattberg, R. and Wisniewski, J. "How Retail Price Promotions Work: Empirical Results," Working Paper 43, University of Chicago.)
THE DEAL DUDE SALUTES... STEPHEN HOCH
Hoch, along with Brian Wansick and Robert Kent, in the late 1990s studied how grocery stores encourage shoppers to buy. (1) They use unexpected numbers, e.g. $4.78, which seems to signal a good deal. (2) They price multiple items with unexpected numbers, such as 3 for $1.97. Similarly, people are more likely to respond to a "three for $3" offer even if they need only one. (3) They limit purchases to 12 per customer, or one per day, which pushes people to max the limit. (4) They suggest you should buy more than one of the item with suggestions such as "Stock up!" or "Buy one for all your friends." As Lee Eisenberg notes in Shoptimism, there are other pricing stategies used everywhere, such as "segment-based" (package deals), nine-and-zero effect ($19.99 instead of $20), "prestige" (fancy packaging), "penetration pricing" (low prices to lure you into a newly opened store), "skim pricing" (high initial prices on new product, e.g, the iPhone) and "shrinking package pricing," or a smaller package at the same price.
THE DEAL DUDE SALUTES... DAVE GOLD
When Gold and his wife owned a liquor store in the 1960s in southern California, they experimented with pricing wine at 79 cents, 89 cents, 99 cents and $1.49. The 99-cent wine always sold better than any other pricing point, so they started pricing everything at 99 cents. In 1982 the couple launched a chain of 99 Cents Only stores; today there are 282 stores in the chain and the company is worth about $500 million. It's not clear who invented the concept of 99 cents as a price but the earliest printed advertisement discovered so far dates to 1880.
THE DEAL DUDE SALUTES... ELIZABETH ROYTE
In her book, Garbage Land: On the Secret Trail of Trash, Elizabeth Royte attempts to track all of the waste she and her family produces to its ultimate destination, including recycling, computers, mounds of excess plastic and paper packaging, food scraps and even sewage. It's a fascinating read that compels you to more carefully consider everything you dispose of, especially since the average American throws away an estimated 4.3 pounds of trash each day. The goal, although unachievable for most people, is zero waste -- everything gets reused somehow.
THE DEAL DUDE SALUTES... WAYNE KINGWELL
Border officials caught Kingwell, 40, attempting to sneak from Canada into the U.S. by floating down the icy Niagara River on a rubber raft. After being treated for hypothermia, he told authorities that he had been trying to avoid paying an $85 fee that his credit card company charged for mailing his payment from Canada. (spotted in The Week)
THE DEAL DUDE SALUTES... MARK WELLER
As executive director of Americans for Common Cents, a Washington, D.C.-based lobbying group that fights to keep the penny alive, Weller testified before a U.S. House banking committee as to the many reasons why the coin should be preserved. Chief among them, he said, is that eliminating it would allow merchants to round up to the nearest nickel, costing consumers an estimated $600 million annually. The penny is also a moneymaker for the U.S. Treasury. "The penny costs only .7 cents to make, so the Treasury makes .3 cents on each penny minted. This seignorage amounts to over $40 million each year." (spotted at pennies.org).
THE DEAL DUDE SALUTES... ECONOMISTS
Economists are notorious cheapskates, reports the Wall Street Journal. They don't gamble, they give less to charity than people who study other fields, they return calls collect and they are more likely to be "free riders," such the person who orders the most expensive dish at a restaurant because he or she knows the check will be split evenly. But one economist defended the bunch, saying they aren't cheap but they are concerned with a loss of economic efficiency. "That means that they often fail to do the nice little social gifts that seem wasteful to economists," explained Betsey Stevenson of the University of Pennsylvania's Wharton School.
THE DEAL DUDE SALUTES... TOBEY MAGUIRE
In an interview with Men's Journal, the Spiderman star revealed that he is a bargain hunter. He's made millions from the movie series and put nearly all of it in the bank. When he travels, rather than take a private jet, he buys the cheapest coach ticket he can find. The only way he'll upgrade to first class, he says, is if he has enough miles. "It's hard for me to justify spending that much money for a first-class ticket," he says. "You know those Lotto winners who win big and then blow through all the money? That would never happen to me."
THE DEAL DUDE SALUTES... THE ECONOMIDES
In their book, America's Cheapest Family Gets You Right on the Money, Steve and Annette Economides discuss how they and their five children live frugally but well. One bit of advice they offer is to decide on your "time versus money" threshold. If a simple phone call will resolve a bank error, for instance, that should be done. But if the resolution of an issue doesn't yield more than $10 or $15 an hour, it's best to let it go and spend that time with your friends and family.
THE DEAL DUDE SALUTES... THE FBI
Since at least 1986, the FBI has been tracking down U.S.-based terrorists who fraudulently redeem Sunday newspaper grocery coupons to fund attacks. During the trial of the men who bombed the World Trade Center in 1992, investigators claimed that U.S.-based cells had raised $100 million by processing coupons through stores they owned in New York, New Jersey and Philadelphia. According to one report, about $500 million worth of the $3.8 billion in coupons distributed each year are redeemed fraudulently. For more details, see Ben Jacobson's 1998 testimony before the U.S. Senate Judiciary Committiee on Terrorism and Technology. In 2006 Jacobson wrote us with an update: "Coupons are still a means of financial support for terror cells operating within the U.S. This has been demonstrated over the past few years by various arrests of terrorist sympathizers within the U.S. who have used grocery coupons to finance their activities."
THE DEAL DUDE SALUTES... DAVID PHILLIPS
The Davis, California man was excited to see the promotion by the Healthy Choice prepared food company: mail in 10 proofs of purchase and get 1000 frequent flier miles. Getting 1000 miles for ten $2 dinners wasn't bad, he figured, but getting them for ten 25-cent pudding cups was better. "I quickly realized that for 25 cents I was getting 100 free miles," Phillips said, so he bought $3140 worth of diet pudding cups, earning 1.25 million miles, or about $25,000 worth of flights. As if that wasn't good enough, he also donated the pudding to food banks for a tax deduction. (spotted in This is True. Copyright © 2000 by Randy Cassingham. Posted with permission.)
THE DEAL DUDE SALUTES... MSREALITY.COM
"The person who requested this message would like you to be a little more aware of you lack of generosity or reciprocation. He or she feels that you are a little on the cheap side. Cheap people can afford things, but choose to take advantage of the generosity of others, even if those generous people are less well off. The bottom line is this: cheap people alienate others, which can cause them to be passed up for opportunities, and excluded from social events. Is saving a few dollars really worth the long-term loss?" -- from a form letter once available at MsReality.com, a service that sent anonymous emails to inform visitor's friends or relatives of how they were perceived by others
THE DEAL DUDE SALUTES... GEORGE PEABODY
Although he later became a noted philanthropist, the 19th century banker didn't always find it easy to be separated from his money. The best-known story of his thrift was told by Junius Morgan, who became his business partner in 1854. Peabody didn't own a carriage but would come to work by public horsecar. One day, Morgan told Peabody that he looked sickly and should probably go home for the day. Peabody agreed. Twenty minutes later, while running an errand, Morgan found Peabody standing in the rain. "Mr. Peabody, I thought you were going home," he said. "Well, I am," Peabody responded, "but there's only been a two-penny bus come along as yet and I am waiting for a penny one." At the time, Peabody had more than a million pounds in the bank. (spotted in The House of Morgan, by Ron Chernow)
THE DEAL DUDE SALUTES... CONSUMER RESEARCHERS
The Journal of Consumer Research, published by the University of Chicago Press, is devoted to academic studies of why and how people chose the products they do. Recent issues have revealed that people are more likely to choose a product that start with the same letter as their first name, especially if they need it urgently, that people are more likely to buy lower-priced items after they go off sale than higher-priced ones, and that people tend to accept a price-matching guarantee as indicating the store has the best price only if it takes too much effort to confirm it.
THE DEAL DUDE SALUTES... NANCY'S DATE
"How cheap was he? He didn't want to pay for a parking lot, so he parked on the street. And, guess what, he got a parking ticket. He cursed and said no way was he going to pay it. Then he put it on the windshield of the car parked behind him. I reminded him that the ticket had his license plate number on it. He said, 'Yeah, but you never know -- nobody reads parking tickets. The guy might just pay it.' " --Nancy, 23, of Boston, in America's Dumbest Dates
THE DEAL DUDE SALUTES... MISSISSIPPI
Each year the Catalogue for Philanthropy compiles a list of the most generous and cheapest states, measured by how much residents give to charity. The most generous state is Mississippi, followed by Arkansas and South Dakota. The cheapest state (in this case, not such a good thing) is New Hampshire, followed by Massachusetts and New Jersey. But critics such as the Boston Foundation say a different methodology is needed. It says that if you take each state's share of overall charitable contributions and income and adjust for differences in taxes and living costs, Massachusetts jumps from 49th to 11th.
THE DEAL DUDE SALUTES... COUPON PROFESSIONALS
The Association of Coupon Professionals promotes the use of coupons through initiatives such as make it easier for retailers to handle coupons by adding bar codes and educating the public and merchants about redemption and rebate fraud. The ACP says the best coupons emphasize "stock-up" strategies, are about the size of a dollar bill and have a clear expiration date. "A good coupon begs to be redeemed," it says. Each year ACP members get together for a few days at a big city hotel somewhere to talk about coupons. What could be more fun?
THE DEAL DUDE SALUTES... SNICKERS SHOPPERS
"Humans obey when retailers tell us to buy more. Brian Wansink, professor of marketing and director of the Food and Brand Laboratory at the University of Illinois, performed a study with full-price Snickers bars at a convenience store. The researchers put up a sign that said, 'Buy some for the freezer.' They also tried a sign that said 'Buy 18 for the freezer.' Few people actually bought 18 candy bars, but they did buy 1.5 times more than when the sign simply said 'buy some.' Wansink says: 'Even in the face of zero discount, it still ends up influencing people. It's a really powerful effect.' " -- from an article in Kiplinger's Personal Finance, November 2000
THE DEAL DUDE SALUTES... OPRAH WINFREY
The talk show host, who is worth about $1.3 billion and has homes in Hawaii, California and Chicago, was quoted in the January 2005 issue of Budget Living as saying, "I still get a little thrill whenever I see those two words: free and discount." Which goes to show -- it's not how much you have, it's how much you save.
THE DEAL DUDE SALUTES... LARRY ROTH
"I believe in a win-win approach to life. Taking advantage of everybody and everything is win-lose. In the long run, as these people accumulate 'free' things that take up space and complicate their lives, their win-lose approach will leave them empty. For example, I recently won a fairly expensive prize that I couldn't use from a store in my neighborhood. It was free, so I took it. Eventually I found someone who could use it, but it took some effort to get this 'prize' out of my life. Even free things are not bargains if you don't need them." -- from The Limits of Cheap by Larry Roth, author of The Best of Living Cheap News
THE DEAL DUDE SALUTES... C.W. POST
In 1895 the cereal maker distributed the first grocery coupon, awarding consumers a penny off his new Grape Nuts product. Today the Promotion Marketing Association says 77 percent of all Americans use coupons, saving more than $3 billion per year on purchases. It says the most dedicated clippers are people who earn between $50,000 and $75,000 per year.
THE DEAL DUDE SALUTES... NEW AFFLUENTS
According to a poll conducted by Visa Signature, the group most likely to clip coupons are the 7 percent of the U.S. population known as "New Affluents," or Americans age 35 to 54 whose household income is at least $125,000 per year. These consumers tend to have worked hard for their wealth, so are vigilant about spending it wisely. Almost three-quarters of the group say they clip coupons, which is much higher than the national average of 65 percent. Nearly 80 percent said they have a credit card that allows them to earn rebates or perks, versus 38 percent of the overall population.
THE DEAL DUDE SALUTES... JOHN D. ROCKEFELLER
Spend your earnings prudently. That was the lesson drilled into John Rockefeller by his Puritan parents. While attending Brown University, the future founder of Standard Oil was known to other students as the rich boy who trimmed his frayed cuffs, soaked two-cents stamps apart, and pressed his trousers beneath his mattress. He also wrote down every cent that he spent in a little book he carried in his pocket, and he would later insist that his children do the same. (spotted in Abby Aldrich Rockefeller, by Bernice Kert)
THE DEAL DUDE SALUTES... ARISTOTLE ONASSIS
The late billionaire once explained: "Since I am known as a rich person, I feel I have to tip at least $5 each time I check my coat. On top of that, I would have to wear a very expensive coat, and it would have to be insured. Added up, without a topcoat, I save $20,000 a year." (spotted in The Portable Curmudgeon)
THE DEAL DUDE SALUTES... LESLIE WARE
Since 1994 Leslie Ware has been writing the entertaining "Selling It" column on the last page of each issue of Consumer Reports. Ware reports on packaging (often submitted by readers) that stretches the limits of credibility, e.g. "new and improved" boxes that are actually smaller and cost more, painful fine print that invalidates the screaming text above it or junk mail that tries to pass itself off as a parking ticket or official government notice. The best of Selling It has been collected in Selling It: The Incredible Shrinking Package and Other Marvels of Modern Marketing. It's a book that no dedicated deal hunter should be without.
THE DEAL DUDE SALUTES... RICHARD AND PETER WALKLEY
Richard and Peter, who live in Hemel Hempstead, England, earned about $19,000 last year by taking advantage of discrepancies between posted prices and scanned prices at a chain of British supermarkets. The stores offered any price-mismatched items free; the Walkleys carefully looked at every item in the store and used the guarantee to claim large quantities of grocery store products, including 19 cases of beer. (spotted in News of the Weird)
THE DEAL DUDE SALUTES... JACK WELCH
In 2002 the business mogul's wife filed divorce papers that revealed that General Electric had been giving him about $2.5 million in perks each year, including the use of a Manhattan penthouse and jet and limo travel, even though he no longer worked as CEO of the company. This in addition to his $9 million annual pension. Welch agreed to write GE a check each year to pay for the perks. Observed one shareholder watchdog, while noting that Welch and other CEOs could easily afford to pay for the perks that corporate boards give them for nothing: "If you're very, very wealthy, nothing you buy will give you as much of a charge as getting something for free."
THE DEAL DUDE SALUTES... HEYDANEK, WOOLFORD, BAUGH
In a 1979 issue of the Journal of Food Science, Menard Heydanek, Geoffrey Woolford and L.C. Baugh of the Flavor Technology Department of the John Stuart Laboratories at Quaker Oats published a paper entitled "Premiums and Coupons as a Potential Source of Objectionable Flavor in Cereal Products" (we think coupons make everything taste better!). The researchers found that the standard plastic envelopes used to keep the coupons and toys from touching the cereal are adequate protection for a year or more.
THE DEAL DUDE SALUTES... JIM MILLER
During one NFL season the Chicago Bears quarterback was suspended for the final four games because he tested positive for taking the banned steroid nandrolone. Miller said he had run out of his regular brand of a dietary supplement, which aids muscle recovery after workouts, and used some of another brand he had sitting around the house that contained the banned substance. "It's going to sound funny, but I was waiting for the first Tuesday of every month to go purchase my normal stuff because GNC offers a 20-percent discount," he said. Miller earns $400,000 a year, the NFL minimum for a sixth-year player. The suspension will cost him a fourth of his salary, or $100,000. (spotted in the Chicago Tribune)
THE DEAL DUDE SALUTES... JUDGE ROBERT ANDREWS
Circuit Court Judge Robert Lance Andrews of Broward County, Florida cut a request for legal fees by the New York firm Zwerling, Schachter & Zwerling to $294,000 from $1.4 million in a class-action suit involving a cruise line accused of padding port charges. The 80,000 customers who had been overcharged each received coupons for $10 to $60 off their next voyage (essentially worthless when you consider the cost of a cruise), so the irritated judge ordered that a quarter of the legal fees, or about $70,000, be paid with the same coupons.