New cars are so expensive that paying the asking price makes no sense

Heavily discounted cars in the showrooms.  Winter and summer sales on electrical goods. Savings of a third or more when travelling on off-peak trains. Such things are no-brainer bargains, right?

Er, maybe not. These, and other consumer products, are often excessively priced in the first place. Inevitably, they struggle to sell, so discounts have to kick in. The argument goes that technically, legally and psychologically, consumers enjoy great deals. But do they? Really? In most cases, isn’t it more a case of the pre-discount prices being greedily over the top, while the post-discount amounts are much fairer and more appropriate? I think so. In fact, I know so.

Examples: I occasionally take a train from just outside Greater London to the centre of the capital. If I buy a ticket for the one leaving (allegedly) at 9.35am, the price is from £44.20 return. But on the next one, 15 minutes later, the price plummets to £23.20 – almost 48 per cent less. Am I happy when I get my almost half-price rides? Absolutely not, because the ‘product’ is only worth £23.20, if that. Not only is the slightly earlier £44.20 fare not worth it, I consider it criminally expensive. 

The story’s similar when buying items such as TVs and portable power banks that are small enough to carry in a car boot. Discounts of around 50 per cent have almost become the norm lately. And again, that’s because pre-discount official prices are so stupidly high. 

Last week, I spotted a brand-new, almost £100,000 car discounted by around £24,000. But before you take the bait of this amazing ‘deal’, you need to think it through properly. 

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Ask yourself if the car could ever justify its original RRP of almost £100,000? Was that just a crazily ambitious figure that the manufacturer plucked out of the air in the hope that at least a few mugs might be daft enough to pay it? Possibly. Also, could the heavily reduced price tag be closer to the true value of the new car? More than likely, I’d say.  

Whether we’re talking train tickets, electrical goods or some (not all) new cars, the prices consumers are initially hit with can be knowingly and unreasonably exaggerated. If manufacturers, service providers, retailers and others eagerly offer to heavily reduce their official prices, they’re in effect admitting that they were over the top to start with.

Some might argue there’s nothing wrong with presenting exaggerated and obscenely high RRPs to would-be customers in the hope that they’ll pay them. And when they don’t, the heavy discounts are applied and true, honest, real-world prices are paid. 

But my counter-argument to firms trying to charge you too much goes like this: Stop trying it on. Abandon your fictional pricing policies. Keep reminding yourselves that there’s no need to resort to heavy discounts if the RRPs are right, fair and proportionate from day one. Besides, new-car discounts play havoc with resale values.

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