First impressions can sometimes be misleading. Take price tags. We assume they reflect the true value of items and services but, as reported recently in Time magazine, some prices are absolutely meaningless and designed to trick us into spending more.
While businesses may be quick to employ sneaky pricing strategies to boost their bottom line, here’s some advice to help you protect yours. Learn about four instances when you shouldn’t really take that price tag at face value.
Who doesn’t love a sale, especially when we see major price reductions? But are we really saving a bundle? Based on the so-called “full” price it may seem so, but when you consider the fact that the store always planned to mark down those designer jeans and still turn a profit, it’s clear that its advertised “original” price is inflated and nonsense.
Anyone who’s ever bought a car will tell you the manufacturer’s suggested retail price, or MSRP, is hardly what he or she paid to drive it off the lot. Fact is, buyers almost never pay the sticker price after factoring in rebates, good financing terms and the art of haggling. And all the theatrical back and forth over price can drag on for hours.
Fortunately some dealers are learning it pays to cut to the chase. AutoNation, the country’s largest dealership chain, is rolling out a new pricing strategy that admits list prices are basically bogus. Cars will be priced based on current market data, allowing both buyer and seller to base negotiations off of a more realistic figure.
If you’re worried about sending your kids to college—whether it’s next year or 10 years from now—don’t let reports of rising tuition costs make you abandon the idea altogether.
Just like with new cars, hardly anyone pays full price. Scholarships, grants and loans can all chip away at the list price. On the Princeton Review’s list of 2013’s Best Value Colleges, the average cost for an in-state, incoming freshman at a public school is about $19,000. The average cost for incoming freshmen at private schools runs about $54,000. But after grants and state and federal financial aid, those average costs drop by nearly half at many schools. And don’t let price tags limit your search. Sometimes the costlier schools offer more generous financial aid packages.
Finally, when it comes to healthcare, prices listed on medical bills can be so exorbitant it may seem they’ve been totally made up! Time magazine recently analyzed medical bills and found that hospitals have price lists, so-called “charge masters,” that detail patient costs for everything from gauze pads to MRIs.
According to Time’s investigation, many hospitals consider charge-master bills to be the beginning of a negotiation, but patients often aren’t aware. For example, a Connecticut woman lacking insurance was charged nearly $200 for a blood test worth about $14.
What other prices you consider pointless? Connect with me on Twitter @Farnoosh and use the hashtag #finfit.