How To Spend: Keep a Price Book

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The abstract design on my shampoo bottle reminds me of the changes in price I’ve recorded in my price book.

About seven years ago, I was talking with my hair stylist about thinning hair and she recommended Nioxin 2 shampoo. It is one of those shampoos that is a professional-level shampoo and thus comes with a professional-level price. Although it retails in various stores both online and around town, it is not available in most grocery stores.

Because I buy in the 33.8oz bulk size and use only just enough, it takes me a year before I run out of shampoo.

When I go to buy shampoo online, I can find the same shampoo selling in various sizes or sets for various prices. Off the top of my head, I would never remember what I paid for it the year before.

Although with simple math, I can figure out which listing on any given website is the cheapest, I would not be able to know if that vendor overall is more or less expensive than other vendors. If I do, by chance, remember that I got the shampoo for a better price the year before, I might not remember from where I got it.

No one can remember the price, location, or name of the product of every purchase you have made off the top of your head. However, if you keep a price book, you can easily revisit this information when the time comes to purchase another item.

I keep track of the price and date paid for purchases I make for items I might want to buy again, such as clothing I love or supplies I buy in bulk. I also keep track of where I found the best prices so that I can easily order them again.

For my shampoo, I have purchase information going back five purchases or six years. On average my shampoo has lasted 461 days or just over 15 months. The time between purchases varies less than 10%. Using a little math, this means I use about 2 ml (or 2 cubit centimeters) of shampoo when I wash my hair every day. I usually get as little as I can, and it is much more than I need.

Although my shampoo retails for $45 for 33.8 oz, the price I have paid averaged about $25. The highest price was $30 and the lowest was $19.

Keeping track of my past purchases helps me in more ways than just saving a bit of money every year. The shampoo is part of a brand that has many similar sounding shampoos. Keeping track of the exact name to purchase has helped me avoid the hassle of purchasing the wrong product and then trying to return it. Keeping track of the URLs where I can find the product again keeps me from blindly scouring sites looking for it. Also, keeping track of the price lets me know if I am being taken advantage of or it is time to shop around again.

Looking back at my history of purchases, the price I pay for this product has been going down. This might be because each year I am willing to put in some amount of time to find the best price and thus find a better one than the year before. My purchase last year only cost $18.90.

When I looked this year, none of the five vendors I used in the past had this product at a reasonable price. In many places, my shampoo is listed as $51.00 on account of the coronavirus pandemic. Knowing that you are paying three-times what you paid before is an important reminder that there should always be a price above which you will not purchase something.

Amazon’s price or $27.88 is 10% higher than average and 48% higher than my purchase last year. Amazon is advertising that their price is discounted 32% from the normal price of $41.00. Advertising a discount from an unreasonably high list price is a common but deceptive tactic used by vendors.

Amazon is entitled to change their price, just as I am entitled to be suspicious and shop around. This year, I found the same product for sale on eBay for $18.69 with free shipping, an all-time low for purchasing this product. My shampoo arrived two days later.

Paying the lowest price for my shampoo is not the goal of keeping track of my past purchases. Making it easy to spend my money wisely, without vendors taking advantage of me, is my goal.

You may want to be ready to change your purchases if you discover that something is expensive. There should be a price for everything above which you are unwilling to buy it.

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Follow David John Marotta:

President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.