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Price, Price, Baby



All of sudden price is everywhere. I sit and watch the television and the adverts are Price Crunch, Price Crash, Smashing Prices, Price Slams and Prices we are going to tie you to a table and squeeze you until blood comes from your ears…..

So yesterday the Government increased VAT to 20%…for those of you that don’t know, VAT (Value Added tax) is basically a tax on the price of most consumer goods. And of course in response the retailers are all showing how they are reducing prices rather than increasing them whilst of course the brightest retailers HAVE been slowly increasing prices since the announcement of the changes so that at the application they can show they are holding or reducing prices. Don’t believe me? Bet you I’m right.

I’m not sure how much of this actually makes a difference to be honest. VAT has been at increasingly higher percentages over the years, 15%, 17.5% does 20% really change our attitudes? Short term maybe…medium term, consumers will just suck it up and get on with it. I really don’t think we’re are that price sensitive anymore.

So I know times are tough and I know that we are all watching what we do, but is price the all determining factor? I just don’t buy it (geddit?).  We have income and we have out goings and we make decisions based on a set of values that we hold….we place them in value of importance to us. Each and every person is different.

Of course if something increases by 25%, by 50% we take note….but a few pence here, a few cents there, the odd centime or deux do we really take notice? I don’t want to sound insensitive or arrogant…I know that I am luckier than many. I just think consumers are more savvy than just the price game.

We take a whole range of things into account….but maybe I’m wrong…..

4 Comments leave one →
  1. 01/05/2011 12:44

    I think you’re right that price sensitivity has changed over the years. I heard an interesting snippet recently which hangs nicely with this. I hate the way prices often finish with xx.99 – why not just say xy.00 and spare me the aggro of small change. Apparently, many retailers stick with it as it makes it harder for sticky-fingered sales assistants to hide their activity. Kinda nice to know, but it doesn’t hang right for the larger purchase shops were pretty much every transaction is electronic these days – so why do they hang on to it. Do they believe I’m really more likely to purchase something at £199 instead of £200?????

  2. 01/05/2011 14:11

    I may have moaned about this slightly on twitter yesterday too as I got bored of hearing it on the news over and over and over… They kept saying that VAT increase would affect families “up to £400 per year”… I mean, that’s like £8 per person per month… I’m pretty sure there won’t be too many bankruptcies from that… :s

    Also, the staples like groceries and utilities are not affected so in many respects it’s only the more luxury of goods that are being hit. Even children’s clothes, books, education, health services, etc. are unaffected.

    Typical scaremongering. If you can’t afford it then don’t buy it, I say!

  3. MrAirmiles permalink
    01/05/2011 14:48

    I went to buy a new shower today (yes, being unemployed at the moment is forcing me to do DIY I’ve been putting off for a while) – could have bought it last week to avoid the VAT increase but didn’t. I could have saved £12.75!

    We got chatting to the shop owner (local shop for local people) and asked him if the VAT increase had put people off and how they were coping with it.
    His response: “nah mate (in Sarf-London accent), not really! Just a pain in the a.. to admin…so we’re still selling at last year’s VAT prices for the time being”.

    Others (a well know coffee chain), increased their prices in December, just before Xmas and to coincide with the launch of their xmas drinks, so when people turn up this week they won’t even notice the difference.

    OK…had I bought the shower last week I could have a spare £12.75 to spend at the pub later…
    Will the VAT increase really stop consumers? Not really…

  4. 01/10/2011 10:06

    @James Mayes – Nice to see the trusting hand of employers in practice! Personally I agree, the 99 thing is just nonsense…..

    @Wendy Jacob – Totally……good point, well made.

    @MrAirmiles -I want to hear you so that accent!!!

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