Even though comparison shopping is one of the most basic ways to save money, a 2003 report indicates that only about half of all consumers shop around, often because they believe it won’t make any difference. However, the same report shows that comparison shopping does pay off.
Those surveyed indicated that the time and effort of comparison shopping would be worthwhile if it would save 10% of a product’s cost; this applied for products including gasoline, car insurance, color TVs, new or used cars, and long distance phone service. For other products (including car rentals, plane tickets and life insurance) the survey respondents said that comparison shopping is worthwhile only if savings is 25% or more.
In a related study, researchers examined how much can actually be saved by shopping around. For many products, the savings greatly exceeded 10-25%. For color televisions, savings was over 20%; for plane tickets, savings was more than 50%. Clearly, shopping around pays off better than many consumers realize.(Source: Consumer Literacy Coalition, Consumer Fed of America)
Another way to look at the payoff is to compare the time spent in comparison shopping with the amount of money saved. In many cases, shopping around can be done quite easily, by phone or on the internet. Study examples included: spending 16 minutes to save $100 on a color TV; spending 21 minutes to save $26 on a two-day car rental; and spending 15 minutes to save $139 on an airline flight.
Consider how those savings translate into hourly wages: $375/hour; $74/hour; and $556/hour! If comparison shopping was a job, we would all be standing in line to apply!
Is Cost the Only Factor?
When shopping for a product, cost is obviously an important consideration. Does that mean that the less-expensive product is always better? No.
Quality. It may be worth paying more for a product because it has the taste we like, or a feature that is important to us. If we want a product to last a long time, then we may decide it is worth paying more for high-quality materials or construction. On the other hand, poor quality may be just fine for an item that will only be used once or twice.
Local Business. It is common for consumers to choose to shop in their own town, to support the local economy, even if they could spend less elsewhere.
Service and Warranty. Paying a little more may be worthwhile if it gives you a stronger warranty or access to on-going repair service.