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Many large retailers are now using pricing software ("yield management" programs), that time sales, set prices, and even raise prices when it's least likely to be noticed. This software predicts when demand is most likely to peak or wane on a particular item or style of clothing and sets prices according to algorithms. It also incorporates weather data to predict demand of certain items, and can even change the price of an item according to it's location (Ever wonder why the shirt cost less at one Target than the same shirt at another Target? It's not a fluke.)

The software can even lower prices of very noticible items to give the impression that everything is cheap, while raising the price on other items to more than make up for it. For example, chips could be on sale, but salsa will be marked up more than enough to make up for it. So what's a shopper to do now that many retailers have started using this software to squeeze as much money as possible out of us? Here's some tips:

Rebates -- High value rebates (over $100) are only cashed in 40% of the time. Rebates under $10 are only cashed in 4% of the time. Manufacturers know this, and will give very good deals with rebates, knowing that they'll only have to honor a small number of them. Take advantage of this when you can. If you're apt to complain about the 5 minutes it takes to fill out a form for a $10 rebate, just think: do you make $120 an hour after taxes at work? I don't.

Timing -- Stores usually review their sales on Monday, then drop prices on certain items on Wednesday. The best selection of sale items are often available on Wednesdays and Thursdays.

Gift Card Discounts -- Retailers know that 12% of gift cards are never redeemed, so they will often sell them at a discount. If they sell $100 in cards for $90 or $95, they are still likely to make money on unredeemed cards. Take advantage of this in stores you regularly shop at.

Double check -- Retailers will often advertise something, then place it next to higher priced items that look similar. Check to make sure you've got the right thing. Pay attention when checking out to make sure the right price is ringing up.

Turn to the business pages in the newspaper -- If it is being reported that sales are soft or inventory is high, the sales are going to be good after Thanksgiving and get even better in December. If sales are in line with inventory, don't bet on the item you want dropping in price; it probably won't.

Use the internet -- Compare prices and search for coupon codes online. Example: google "coupon codes" +penney for J.C. Penney's coupons. Airlines and hotels have been using yield management software for quite some time. Shop around for whatever deals are left.


Sources:
Kadet, Anne. "The Price is Right." SmartMoney Dec. 2004: 90-94.
http://www.wired.com/news/print/0,1294,59451,00.html
http://www.htmagazine.com/archive/Oct2001/Oct2001_5.html
http://www.hotel-online.com/News/PR2004_2nd/June04_HotelKingdom.html
http://travel.guardian.co.uk/news/story/0,7445,1187739,00.html


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