Where have all the bargains gone?

Another effect of the recession which we have seen is that lots of the really cheap office furniture offers have disappeared from the internet.

This also seems to be the case for other stuff usually bought through on line shops or on Ebay.

It does seem strange that in this recession the cheap stuff which was abundant in the boom, has suddenly vanished. Why is this the case, as you might expect demand for the cheapo stuff to increase when money is tight.

If you delve into this a little deeper the answers become quite obvious.

Firstly, one of the main reasons is that when budgets are tight, you simply cannot afford to buy cheap. By this we mean that you have to be looking for value for money, rather than just a cheap price.

When the economy is booming, it’s easy to just buy something cheap and then replace it in the short term, but when the market is tight, then you need to be looking to purchase something which will last a long time.

The second reason is to do with economies of scale. Simple economics dictate that when there is a large market and a large number of suppliers, then the price of goods will fall.

When demand falls sharply, the manufacturers cannot  sustain the cheap price, and either cease production of that product, or increase the price to achieve a more reasonable margin for the reduced level of sales.

Even if the manufacturer can afford to sustain his manufacturing cost, the cost of packaging,  transport and fixed overheads will increase per unit, due to the reduced demand, which means that the manufacturer still has to increase prices.

And the third reason is to do with competition. There will always be competitors in the market place who sell cheap due to desperation or stupidity, and these businesses are often the first to disappear when times become tougher.

In addition businesses which rely on low prices and offer minimal service, also rely on new buyers all the time. When the supply of new buyers starts drying up, so do their sales.

So a recession often forces customers to carefully consider their purchases and never to rely on impulse. It forces them to look for value for money, added value in terms of service and guarantees, and product or supplier heritage.

By this we mean that the buyer is looking for a seller with a good reputation and history in the market and products which are well known and tried and tested.

However, with regard to purchasing, a buyers decision should not vary according to whether the economy is booming or busting, or anywhere in between.

They should always be looking for value for money, decent service, and product heritage.

After all if you pay a little too much, all you lose is a little money, but if you pay too little, you  stand to lose a lot