Buying Big Purchases
In the series “Buying Big Purchases”, Money Bear Club will examine how consumers buy the largest purchases of their lives, and analyse how these purchases can be handled better. Buyers dealing with big purchases will find a wealth of information. Others will get acquainted with buying and decision-making methods that can help in many areas of life.
The third part of the series will analyse how consumers buy luxury goods. Readers will find a lot of tips and tricks related to buying ships, planes and helicopters, and of course, higher-quality clothes, appliances and similar purchases.
The first two parts of the series can be found here:
Buying a ship
How consumers buy a ship…
There are two main categories of people buying ships and yachts.
For some people, a ship is a mechanism to lower their taxes. Declaring the ship as their living place, and writing off the costs of it, can help to save on taxes.
This often pushes up the prices of ships best-designed for living (yachts), and along with them, other ships. Sellers are oriented to increase their revenues. Catering to the category which welcomes large prices, increases the prices of all ships.
For others, ships and boating are a passion. Working on a ship and manning it delivers enjoyment to these individuals. People who are passionate about boating also often choose to not keep a crew, as it decreases the activities the owner can do on the ship.
…and what can you learn from that
The amount of individuals and companies interested in buying or renting ships creates high demand for them. If almost every seaside area offers plenty of ship choices for rent, then it could mean that it is a profitable venue for business.
For people who rarely use ships, renting out one could a good choice. However, those who are looking to use a ship for more than a month per year, should look into buying. It could decrease the costs of use.
An owner can also easily turn a ship into asset by renting it out when it’s not in use. That’s an opportunity non-owners can’t use.
Declaring to sellers that the ship is being bought for fun, rather than as a way to save money, is a clear signal that the buyer will not be swayed by often unnecessary add-ons and interior decoration. It also shows to the sellers that the buyer is ready to walk, and buy from another seller if the negotiation doesn’t go their way.
Saving money on yachts and ships
Choosing to forego a ship personally built for the buyer, and instead buying a generic variant or a second-hand ship will save a lot of money. These categories of products are not as popular among those looking to decrease their taxation rate. Hence, a better deal can be found.
Many people buy ships, and rarely use them. Renting one from a friend or an acquaintance who rarely uses it, can be a great way to feel the joy offered by boating without buying a ship.
Buying a plane or a helicopter
How consumers buy planes…
Aviation products, such as planes, are often bought to be used as means of transportation for executives or other employees.
A private plane is, to some people, a status symbol. Although individuals do buy planes (and commonly, helicopters), businesses do have more buying power than even the richest individuals.
Because buying a plane requires not only the initial sum for the plane, but also recurring expenses for its maintenance, crew, and any unexpected costs, many tend to forego buying a plane.
Charter companies and aviation companies with smaller planes fill this gap. Chartering a plane can be a good deal for companies looking to save working time and increase work efficiency (dealing with airports even in the first class can be exhausting).
For individuals, privacy, time savings, and the comfort a chartered private plane offers can be the reasons to charter one. Compared to the costs of buying and maintaining a plane and its crew, chartering a plane, for less frequent travellers, is often a great deal.
For those with a lower spending power, aviation companies with smaller planes offer a solution. Private jet companies offer opportunities to book a place in a jet through an app, and forego the hassles of airport security. Although the jet is shared with other patrons, the strict rules and the prices of these services push patrons to be courteous to others.
…and what can you learn from that
Planes being a status symbol creates many opportunities for both sides of a deal. Not only can the businesses manufacturing private planes exploit this way of thinking. Smart buyers of planes can also take advantage of it.
Helicopters, because of their lower prices (compared to conventional private jets), then have lower value as a status symbol. This is good for smart plane buyers. Opportunities to negotiate a better price will come far more often with helicopters.
Not only that, a previously used helicopter would not be seen as a worthy purchase for status symbol chasers. This can be an opportunity for buyers looking for a cheap, shorter-distance aviation product.
Saving money on aviation products
Although an older helicopter can offer a good deal, buying an older jet could mean taking on too much safety risk. Plane safety standards are improving at much faster rates, and buying an older plane (15-20 years old) would mean saving money on safety. This wouldn’t be the most optimal choice.
It’s also tempting to buy through the websites of plane manufacturers or resellers. It’s a convenient way. However, an unconventional choice could be a better one.
Tapping into the buyer’s professional network, or asking around friends and acquaintances could be a far better strategy.
After all, many sellers want to sell quickly, and don’t want to burden themselves or their assistants with the hassle of selling it. This can create an opportunity to buy a plane at a cheaper price, by taking off the hassle of the long plane selling process.
Buying luxury goods
How consumers buy luxury goods…
Luxury fashion products, appliances, tools, and other higher-quality products are often impulse purchases. Their craftsmanship invokes feelings of appreciation, and even those of wanting to be the owner of masterpiece. Though, more often, just of a high quality product.
If spending limits aren’t a problem, many buyers will choose to buy luxury goods just because it invokes positive feelings. Luxury stores increase this experience through well-trained staff, attention to each client, and good design choices.
Trends and the influence of social media (Social media as factor in users losing money), also push many people to buy more, especially if they value being associated with qualities like “fashionable” or “modern”. This pushes up the value of newly released items, and decreases the time period of a luxury item being “fashionable”.
…and what can you learn from that
Instead of buying impulsively, buying in advance is the better choice. And not only because some pieces are hard to get a hold of without a reservation.
Buying in advance helps to plan finances, choose goods with high re-sale value, and to build a better relationship with the sales representatives of luxury stores and boutiques.
Choosing to ignore trends, and to look critically at the products offered by luxury good makers also offer a good opportunity to save money. Or, to at least to not waste it on products not worth their price.
Spending money on high quality items often invokes good feelings. Yet, it can also make the wallet of the buyer smaller. Hence, many will choose to buy at consignment websites or shops. After all, the good should be the same as in its regular place of sale, and sold at a lower price.
Contrarily, buying in consignment shops is a far riskier strategy. Because of the business opportunities luxury consignment offer to sellers, many less than ethical sellers choose to cheat others, and to sell fake items.
Some replicas can be high quality ones, and hard to detect. Because of the probability of buying a fake in consignment stores, buying at a charity or a second-hand store can be the better choice.
Saving money on luxury goods
Many people new to the process of buying luxury goods often don’t support the opinion that consumers should strive to save money on luxury goods. This is especially common with consumers who use luxury goods as image items, rather than investments or quality liabilities.
Just not following the mindset that saving money on luxury goods is somehow “wrong” or depriving the brand from luxury value is enough to begin saving money.
Choosing to appreciate classic and proven by time luxury items, can help to save money. Older items not only offer a better deal because of their lower price. They also should appreciate in value faster than newly bought items.
Common purchase traps
Luxury brands, as all businesses, seek to maximize profits. Often, it results in increasing innovation, quality of products, and more thought being put into each good.
Increasing profits don’t always come from the increasing quality of the product. Better marketing and lower spending on research and development can push up profit margins.
New buyers, swayed by the image of the brand, and its previous successes, look uncritically at the quality of the items being sold.
Past performance does not always equal future success in investing. The same way of thinking should also be adapted in luxury item purchases. However, the trap of marketing and brand image often leads to uncritical and low quality purchases.
Too close of a relationship with sales associates also can be dangerous to the buyer’s wallet. Even those who expect high quality service and personal attention, are often swayed by the extra efforts of sales associates.
Humans are social animals, and it’s easy to forget that sales associates are working on commission. Separating the quality of service from the quality or value of the good can be a way out of this trap.
Best deals on luxury goods?
Finding the best deal on luxury goods starts from the understanding that there can’t be one. It’s almost impossible to find cheap high quality items. This happens because for many buyers, the high monetary value is the quality that creates a luxury item.
As long as price and value are unseparated in the minds of luxury goods buyers, finding a good deal will be a process of treasure hunting. Yet, knowing the common purchase traps, and using unconventional thinking should make the process easier.
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